Leisure

Issue 01
February 2007
Expert know-how for Credit Suisse investment clients
Global Investor
Focus
Leisure
Recreation or relaxation The value of free time
Self-organization Stage-managing work and play
New luxury Opportunities for the leisure industry

Glossary
Baby-boom generation The baby-boom generation
denotes the group of people born during the
post-war era, marked by an explosion in births in
the Western industrialized countries. The period
began following World War II (1946) and ended
in the 1960s, with the sudden drop in birthrates
caused by the contraceptive pill. The baby-boom
generation reached its high point in the USA in the
1950s, and peaked in Europe in the 1960s.
Biosensors Biosensors are a cross between
the realms of biology and electronics; they are
comparable to the natural senses of taste and
smell, in that specifically determined molecules
are recognized. The devices are equipped with
a transducer and biological recognition element
and are employed in the field of biotechnology
measurement. Biosensors can be used to measure
the glucose levels in blood, or gauge the bacterial
count in a swimming pool.
DVB-T DVB-T (Digital Video Broadcasting –
Terrestrial) is the earthbound dissemination of
TV signals and is used as the standard in Europe
and Australia for transmitting digital television and
radio via antenna. The North American counterpart
to DVB-T is ATSC (Advanced Television Systems
Committee), while Japan uses ISDB (Integrated
Services Digital Broadcasting). In Great Britain,
the standard is DTT (Digital Terrestrial Television).
Links
www.sihlcity.ch
www.ea.com
www.logitech.com
www.freedomoftheseas.com
www.oecd.org
www.ovum.org
www.cientifica.com
www.instat.com
www.unesco.org
www.nanotech-now.com
www.nanotech.de
Dermal fillers Dermal fillers are injectable
implants comprising substances utilized as skin
underfilling for the treatment of wrinkles in the field
of medicinal cosmetics. Biodegradable or nonreabsorbing
substances can be used as underlying filler
to support and tighten the skin, thus smoothing
out wrinkles. Autogenous fat, collagen and hyaluronan
– key components of connective tissue – are
degraded, while materials such as artecoll and dermalive
are nondegradable.
Generation Y Precisely when Generation Y
begins is a matter of controversy. Some place the
start date at 1976, while others set the beginning
at 1978, or even 1982. One thing is certain: Generation
Y follows Generation X – the group referred
to as the disillusioned post-baby boomers. When
Generation Y exactly ends and what the subsequent
generation is called still remains up in the air.
Some put the cutoff date at 1999. Thereafter, the
new silent generation should have emerged.
3G 3G is defined as third-generation mobile
telephony based on UMTS (Universal Mobile Telecommunications
System) and is regarded as a
standard in the mobile telephone industry. 3G has
paved the way for services such as audio- and
videophones, Internet access, chat functions, navigation
support and much more. The standard is
constantly being updated.

Human capital Human capital is a term used
in the world of economics and business. At the
macroeconomic level, human capital is defined
as the capabilities, skills and know-how that a
person possesses. In the field of business, operating
human capital – i.e., qualified, motivated
employees – is regarded as part of a company’s
intangible operating assets and contributes to a
firm’s long-term success. In the German-language
context, the term has raised controversy; it was
dubbed “nonsensical word” of the year in Germany
in 2004.
IPTV IPTV (Internet Protocol Television) is the
transmission of broadband applications, such as
TV programs or films, over a digital data network.
Internet Protocol (IP) is used for this purpose.
LOHAS LOHAS, a term that originated from
the language of marketing, stands for “Lifestyle of
Health and Sustainability.” It denotes a certain lifestyle
or consumer type. In the medium-term future,
up to one-third of the population is expected to
identify themselves with LOHAS. This type of consumer
is also referred to as a “cultural creative”
and is interested in the realms of health, ecology,
and vigor, among other things – all coupled with
individual indulgence.
Mah-jongg Mah-jongg is a Chinese board
game designed for four players that functions
similar to the card game bridge, but is played with
small domino-like tiles. Internet versions are now
also available, allowing users to play with virtual
partners.
Microtransaction Microtransactions (or micropayments)
were originally payments of very small
sums, equaling a fraction of one US dollar, for
accrued charges incurred for downloading digital
material from the Internet. New game systems,
such as Microsoft’s Xbox 360, Sony’s PlayStation 3
or Nintendo’s Wii, have integrated the possibility of
effecting microtransactions. Accessing additional
material in the middle of a video game – for example,
in the form of the latest virtual race car – can
be done via download and the charges incurred
settled with a micropayment.
Nanotechnology Nanotechnology draws on
the field of nanoscience: the scientific discipline
with the goal of researching phenomena on a nanometer
scale: i.e., with dimensions ranging between
0.1 nanometers (one ten millionth of a millimeter)
and 100 nanometers. Nanotechnology enables
processes based on nanometer scale to be controlled.
Urban entertainment center An urban entertainment
center is a further-advanced form of
a shopping center, which is expanded through
adding theme-oriented, integrated recreational
and entertainment offerings such as cinemas,
casinos, discos, hotels and restaurants.
Work-life balance Work-life balance denotes
the ratio of working time to leisure time. When
the relationship is balanced, people are pleased.
Everyone must find his/her own ideal personal
ratio. “Flexible work models” and the opportunity
to “enjoy downtime” are key catchwords in this
context.

GLOBAL INVESTOR FOCUS Leisure — 03
Time is of the essence! Everywhere, people are complaining about
the lack of leisure time and growing time pressure. Probably everyone
is bothered now and then with the feeling of having too little
time. The pleasure of having free time at one’s disposal is not a foregone
conclusion. In fact, leisure time is a key resource that should
be utilized meaningfully.
At the same time, people are rediscovering the value of the
quality of life. Personal health is more important, family life is more
fulfilling, and a day spent in the great outdoors is more beneficial
than focusing on material objects and goods. More and more people
perceive prosperity as the social quality of life, rather than the
mere improvement in living standards. Consequently, the focus on
a sense of meaning will play a significant role in the future.
Nevertheless, in order to enjoy leisure, time as well as money
are always necessities. Coincidentally, the emergence of all the
new consumer goods and services also raises a reasonable question
that deserves an answer: What is it all for? If the findings of
research on the future of the leisure industry prove true, then the
markets of tomorrow will inevitably be characterized by a sense of
purpose too. Communicating values, rather than advertising messages,
could then be what appeals to consumers who also see
themselves as a generation seeking a sense of meaning.
The analysts at Credit Suisse as well as international specialists
in the field have put together a compilation of the most important
trends in the leisure industry, featured in this latest issue of Global
Investor Focus. How has the sense of leisure time evolved, and
which sociological and demographical factors have an influence on
free time? What are the key leisure trends in the Western world
and Asia? Technology, consumer goods and mobility are just a few
of the sectors that play a paramount part in leisure time activities.
Whether football or wellness, enjoying the arts or shopping,
watching television at home or vacationing in a faraway land: tourism,
technology, media – including the markets for video games
and the Internet – education, culture, sports and entertainment are
all obvious growth sectors. The leisure industry thrives on the multifaceted
spectrum of offerings. And the secret of success lies in
people’s growing desire for a better quality of life. I hope you find
it entertaining reading.
Photo: Thomas Eugster, Cover: www.massstudies.com
Urs Dickenmann, Head Private Banking Switzerland

GLOBAL INVESTOR FOCUS Leisure — 04
The search engine Google finds 160,000,000 hits for the term “leisure”, 02/02/2007, 10:48.

GLOBAL INVESTOR FOCUS Leisure — 05
Leisure
6
No time to spend money
Some are too busy to spend money, while others lack the money
to savor their leisure time. A sociologist examines the connection
between leisure, prosperity and education.
11
Everything under one roof
Shopping has become an integral part of today’s leisure time
activities. An interview with architect Conradin Stiffler about
shopping centers that combine department store and entertainment
complex all in one.
16
Tomorrow’s world of leisure
Work-life balance versus the perception of material status.
A futurologist depicts the consequences for the consumer markets.
22
Asia warms up to a cool life
Through many years of hard work, the people of Asia have achieved
prosperity. Now they are beginning to enjoy life. Foong Wai Fong
tells the story of new lifestyles emerging in Asia.
28
Tackling the cable jungle in the digital household
An interview with Logitech International CEO Guerrino De Luca about
the wireless mouse, video communications and user-friendliness.
31
Gaming conquers the world
All over the world, people are playing games – so it should be a
sound business. Asked about the opportunities and risks for
the game sector, Electronic Arts CFO Warren C. Jenson replies:
“Different countries, different games.”
Investments
34
Investing in leisure
The investment opportunities are as diverse as the individual
leisure activities. Trend analysis from the Research Department.
Services
52
54
Authors
Disclaimer

GLOBAL INVESTOR FOCUS Leisure — 06
55
53
51
53.3 hours early school leavers
52.8 hours highschool graduates
Source: Jonathan Gershuny, “Changing Times: Work and Leisure in Postindustrial Society,” Oxford: Oxford University Press, 2003
49
47
45
48.2 hours tertiary education
42.9 hours tertiary education
tertiary education 43.9 hours
43
early school leavers 42 hours
highschool graduates 40.6 hours
41
highschool graduates 41.8 hours
39
Hours paid work per week
37
35
early school leavers 39.6 hours
1960s 1970s 1980s 1990s 2000
The changing work/education gradient
Four decades ago more work in developed economies was carried out by those with less education. These figures represent the paid working hours per week
for men aged 20–59 in Australia, Canada, the UK, the US, Denmark, the Netherlands, Italy and (West) Germany. As brainpower has become more important,
those with a university or similar education have started to put in more hours. Postindustrial societies have less need of the brawn of early school leavers.

GLOBAL INVESTOR FOCUS Leisure — 07
Wealthy but no
time to enjoy it
In the 19th century, the rich not only had the most money but an abundance of time in which
to spend it. Today’s moneyed are more likely to be working late at the office than dabbling in the
arts or indulging their sporting whims. Meanwhile, it is the poor people of the developed world,
struggling to compete for manual jobs in the face of competition from emerging economies, who
tend to have more hours for leisure but also limited means with which to enjoy it.
Jonathan Gershuny, Professor of Sociology, University of Oxford
There has been a major change in the way leisure is perceived.
Once leisure was the prerogative of the dominant social class, not
a society-wide expectation. Now, that class suffers a dearth of free
time. Meanwhile, the growth in the importance of knowledge as
the source of wealth is transforming the economic meaning of the
ways in which we spend our time.
I will suggest that we need more leisure to keep us in work and
that an increase in sports and hobbies in the 21st century may be
a key means of maintaining the integrity of the capitalist system —
a view which contrasts sharply with the early views of the political
left. To understand these 21st-century changes properly, we need
to look back not only to the last century but to the century before
and to two social theorists who shaped the traditional ways in
which we think of work and leisure.
The first of these, once enormously powerful but now largely
ignored, is Karl Marx, who for nearly a century and a half after the
publication of his book “Capital” in 1866 remained perhaps the
world’s most influential thinker on social and economic topics. The
balance between work and leisure was the key metric of Marx’s
economic theory: the “rate of exploitation.” Marx defined this as the
ratio between the amount of labor time that capitalist employers
were able to extract from their employees and the amount of labor
time that was necessary to maintain that labor force, and reproduce
it for the future. Marx’s theory encouraged communists to
pursue shorter working hours (and hence reduce the rate of exploitation)
as a way of lowering the rate of profit, and finally provoking
the economic crisis that would destroy the capitalist system. Others
more sympathetic to the capitalist system, including social democrats
and socially liberal parties, sought, through the same means of
work-time reduction, to mitigate the harsher aspects of capitalism
and to share its benefits more equitably across society.
The consensus across quite a large part of the political spectrum
on these policy objectives has led to what is arguably the longestrunning
and most consistently successful political campaign across
Europe, and has resulted in the progressive reduction in paid working
hours across the developed world. In the 1850s, in the industrialized
countries of Europe, an average working week for a male
manual worker was in excess of 60 hours, with many working substantially
more. At the beginning of the 21st century this has been
reduced, in continental Europe at least, to little more than 35 hours
per week. (Male manual employees in anglophone countries, such
as the UK and the US, still do put in just over 40 hours paid work
per week, while many in Asia work much longer.) When paid holidays
are factored in, we can see that the annual figure for time
spent at work by male manual workers is now less than half what it
was in the 19th-century. If the increase in life expectancy beyond

GLOBAL INVESTOR FOCUS Leisure — 08
Photo: Thomas Eugster
Jonathan Gershuny was appointed Professor
of Sociology at St. Hugh’s College, Oxford
University, in 2006. Among his research interests
are the relationship between the behavior
of individuals and socioeconomic structure
as well as interconnections between
household organization and labor force
participation. See full biography on page 52
the age of retirement is also included, it emerges that for the average
adult male, paid work over a lifetime amounts to little more
than a third of what it did for his 19th-century predecessor. Marx, in
this respect, has indeed triumphed, at least in the developed world.
Meaning of work and leisure has changed
However, the change is much more complex than this summary
suggests. Work and leisure nowadays have a somewhat different
meaning than previously. And they are distributed in a very different
way across society. To understand this change we need to
consider a second social theorist, Thorstein Veblen, whose Theory
of the Leisure Class must be just about the wittiest of all major
texts in political economy. He starts not with the distinction between
work and leisure but with that between two altogether much
less familiar concepts: “industry” and “exploit.”
Industry, in this context, is not a branch of production. The word
is used in the abstract sense, signifying a quality of approach to
specific daily activities. Industry implies a regular, unchanging, unimaginative
attachment to a routine or repetitive task, such as
planting or weeding or work on a factory production line, normally
involving the transformation of some inanimate object through the
moderate application of human strength. Exploit, by contrast, involves
some form of conflict or competition with an animate, cunning
and possibly intelligent agent.
A deeply rooted linkage of superordination with exploit was
reflected in a conspicuous abstention from industrial labor by the
higher classes. This is the origin, in Veblen’s account, of the deployment
of leisureliness as “the badge of honor” in late 19th- and early
20th-century society. As an assertion of its superordinate status,
the inheritor class engaged in leisure pursuits analogous to the
exploits of bygone eras, such as hunting and athletic sports, unpaid
participation in politics, scholarship or administration. In the case of
non-inheriting, middle-class men who had to work, at least their
wives and servants could be maintained in “honorific and wasteful
idleness.” Veblen’s best-known surviving conceptual innovation,
“conspicuous consumption,” relates to this upwardly mobile group
which, in his original account, relied on the wasteful deployment of
unnecessary goods and services by an idle retinue expressly to
disguise and distract from the shameful busyness of the master of
the house.
Incentives now are all to increase work time
Veblen was describing work and leisure in a typical industrial society
at the turn of the 20th century — an era in which wealth was
still best understood as being constituted by ownership of material
assets and financial balances. But for several centuries a quite different
sort of wealth has been growing in relative importance. This
is “human capital” — accumulated skills directly marketable in the
labor force. Possession of such skills has been progressively rising
in importance relative to the possession of fixed assets such as
savings, shares, land and so on. Human capital has become increasingly
important for establishing the economic positions of individuals
at the top end of wealth accumulation. Innovations in the technology
of production have led to enormous increases in the volume
and importance of professional and technical work. In the UK, engineering,
scientific and professional work grew from 17% of all
paid work in terms of time in 1961 to 39% in 2001; other less-skilled
service work constituted 30% of work time in both years; and other
manual work dropped from 53% to 30%. Information technology

GLOBAL INVESTOR FOCUS Leisure — 09
and the globalization of trade, enabling the disaggregation of production,
have caused vertical integration within companies to diminish.
Instead they have allowed for the allocation of design, marketing,
finance, transport and distribution functions to distinct
companies, so producing new markets for skills in which those with
high levels of human capital can bargain for higher wages than
would have been possible within integrated firms.
Human capital differs markedly from fixed capital in its connection
to individuals’ income. Fixed capital produces income directly,
insofar as time passes and interest, rents or dividends accumulate.
Its owners, while this time passes, can devote their own time entirely
to play, as was the case with the Victorian leisure class. Human
capital, by contrast, only produces income to the extent that its
possessors allocate their own time to paid work. If human capital,
or more generally embodied capital, is replacing fixed capital as
the income source of the economically best-placed over historical
time, this means also that those who embody the human capital
constitute a new, superordinate working class. A typical millionaire
at the end of the 19th century could clip his coupons and play whatever
and wherever he wished. But the typical million-euro-per-year
worker at the start of the 21st century, perhaps a corporate lawyer
or banker, earns his salary by selling his time. Since he (and increasingly
she) gets richly rewarded for each hour, the incentives now
are all to increase work time. As a result, for the largest part of the
richest groups in our societies, the clearest way of demonstrating
membership of the elite is no longer conspicuous idleness, but, on
the contrary, to be conspicuously busy. The badge of honor is no
longer leisureliness, but busyness.
We can see the implications of this change from long-term
historical comparisons of how people spend their time, using socalled
time-budget studies. These involve large representative
national samples of people keeping diaries which record at exactly
what points of the day they engage in various different sorts of
activities. Such studies have been carried out on a regular basis in
a number of developed countries from the 1960s onwards, and it is
possible to use these to provide an extremely accurate picture of
the amounts of paid work carried out by people with different levels
of human capital.
“Today, it
is being
busy that
makes
you part
of the
elite.”
The new busy boss class
If we take just eight of the countries for which we have good evidence
of historical change in time use from this source — Australia,
Canada, the UK, the US, Denmark, the Netherlands, Italy and
(West) Germany — we can see the consequence of this changed
pattern of incentives. Educational attainment has been associated
with high social status in developed countries for several centuries.
It is also a simple and sensible way of judging human capital levels.
We can see during the closing decades of the 20th century a historic
crossing point at the end of the old dominance of a leisure
class, as the historical relationship between social status and leisure
is reversed.
It was the case in these countries during the 1960s that the
traditional association of status and leisureliness still just about held
good. Men of working age with incomplete secondary education
worked an average of about 53 hours per week, while those with
some university-level education worked around five hours less.
Hours of paid work fell substantially for all groups over these four
decades, but the extent of the fall differed according to human
capital level. By the end of the century those with incomplete

GLOBAL INVESTOR FOCUS Leisure — 10
schooling worked around 40 hours per week, while those with a
university education worked about four hours more. None of this
should inspire any form of pity for the new, busy boss class. After
all, the substance of what passed for the leisure of the privileged
class in the late 19th century and what constitutes the paid work of
some members of the best-remunerated groups at the beginning of
the 21st century remains essentially unchanged. A Victorian gentleman
might have spent his days playing games, as a politician, administering
charities, overseeing the running of his estates or taking
an interest in the management of his investments, while his sons
might be encouraged to spend some time in a fashionable military
regiment or contribute to the development of the arts or sciences.
Money not love
Progressively through the 20th century, these previously “amateur”
activities came to be undertaken not for love, but for money. Sometimes
these transitions into paid work were unproblematic, as in
the case of participation in national politics in the UK (where salaries
for Members of Parliament were introduced in the early 1900s).
But in other cases they were strongly contested. We might remember,
for example, that throughout the middle part of the 20th century
the major regulatory activity of national athletics associations
was concerned not with preventing drug taking, but rather with
preventing athletes from taking money payments for their sporting
activities. The effort devoted to protecting amateur status in leisure
activities represents, from this perspective, rearguard action protecting
outmoded signifiers of social status.
Placed among the best-paid occupations for women and men in
European and North American societies of the early 21st century
are just those activities — sports, politics, business, civil and NGO
management, the armed services, academia and the arts — that
formed the unpaid vocations of the leisured Victorian gentleman.
Such examples may represent only a small proportion of the top tier
of occupations, but they may nevertheless serve to remind us of the
continuing significance of Veblen’s core conceptual device, the
contrast between exploit and labor. Exploit, a form of play, is about
confronting knotty problems, and competing with worthy opponents.
It would be an exaggeration to say that work, even for those
with the best jobs in modern societies, is now play. Nevertheless
exploit, an honorific (and often enjoyable) class of activity, is undoubtedly
a central characteristic of those best-paid jobs.
These 20th-century changes have even more important implications
for the demand for labor at the other end of the spectrum of
social privilege. Technological advance means that year-by-year an
ever-larger proportion of the previous demand for unskilled but intelligent
(in the modest sense of directable) human labor can be
replaced by machines. And the ever-cheaper and ever-faster global
transport system, combined with ever-broader bandwidth communications
and the doctrinaire imposition of global trading access,
means the remaining demand for low human capital labor from rich
countries can increasingly be satisfied by people in (or imported for
this purpose from) poor countries. There is, increasingly, a shortage
of work for people with low levels of human capital.
ic incentives. Can we expect to see a continuing growth in this gap
between the work times of the better-off and worse-off in society?
Will this lead (as some sociologists have asserted) to a growing
polarization between the privileged work-rich/time-poor on one
hand and the disadvantaged work-poor/time-rich on the other?
There is of course no single answer. The future is indeterminate
and differs from country to country on the basis of public policy.
But there is one particular reason for suspecting that this process
may be self-limiting. This is a macroeconomic constraint: just as
paid work occupies real time, so does consumption. Consumption
requires both money and time to enjoy the goods and, increasingly,
services that are bought with it.
Previously the rich, leisured class provided an engine of economic
activity by spending their plentiful free time consuming the
production derived from the industrious poor. When economies
slowed down during the middle part of the 20th century, governments
stimulated their economies by providing some extra income
to the money-poor, who would be more likely to spend it than the
money-rich. Now there may be an interestingly symmetrical opportunity
to manage economies by redistributing free time. If the
work-rich were to become too time-poor, they would not have the
opportunity to spend their money. So polarization may be limited by
the need to maintain the aggregate level of demand for goods and,
in particular, services, which impose very specific time requirements.
Attempts, such as those within the European Union, to impose
limits on paid work hours and to increase leisure time may in
effect represent a new time-use Keynesianism intended to stimulate
demand; increasing leisure time amongst the best-off, who
are most able to pay for leisure services, with the apparently para-
Consumption requires money and time
What do these observations mean for the future of leisure in the
21st century? We can see that those in the best-educated sector
actually increased their hours of work during the final decade or so
of the 20th century, presumably at least partly in response to econom-

GLOBAL INVESTOR FOCUS Leisure — 11
Shopping center or main street? Sihlcity on Zurich’s south side strives to be both: living,
working, shopping and having fun are all combined in one complex. Sihlcity Project Leader
Conradin Stiffler explains how it all functions. Interview by Ruth Hafen, freelance
“For many people today,
shopping is an integral
part of their leisure time
activities.”
Ruth Hafen: What’s the idea behind
Sihlcity?
Conradin Stiffler: We have conceptualized
the entire complex as a city within a
city. Sihlcity combines numerous elements:
besides the shopping center, there’s a
hotel, a cinema and various restaurants.
Our approach is in line with the concept of
an urban entertainment center, but Sihlcity
is not contained all under one roof. We
sought a European variation that included
an outdoor courtyard, which can be utilized
depending on the weather conditions.
In America and Asia, such shopping
centers are always completely enclosed.
Do you have a comparative paragon in
America or Asia?
Conradin Stiffler: In terms of a shopping
mall, we of course looked around at
models abroad. In the US, there are some
very beautiful examples, especially the
Mall at Millenia in Orlando, Florida. Naturally,
we also checked out the Mall of
America, purely because of its imposing
size. In Europe, we were particularly impressed
by the Bluewater mall located
east of London. And in the Asian region,
the shopping centers that appealed to us
most were rather Western-oriented. Some
complexes integrated everything from children’s
playground to an entire leisure park.
In our view, such things were unsuitable
for our European clientele. In Dubai too
there are fantastically exquisite shopping
facilities for the upper-class segment, but
in terms of style they are rather conservatively
European. During my trips to Asia, I
noticed that many people go to the large
malls just to hang out or window shop,
buying very little because they don’t have
enough money. Logically, these places
feature more entertainment options.
To which target clientele do you want
Sihlcity to appeal?
Conradin Stiffler: Our project is geared
to the upper-middle class. So we selected
the shops and restaurants accordingly.
Of course, we want to cover the entire
spectrum, including people with more
modest wallets, who should also have the
opportunity to shop at Sihlcity.
Sihlcity offers relatively few parking places.
Isn’t that a problem?
Conradin Stiffler: Relative to shopping
centers of comparable size, we have an
extreme shortage of parking places. In the
1960s and 1970s, the norm for shopping
centers was that everything had to be
accessible by car, so the complexes were
built out in the countryside. Sihlcity is

GLOBAL INVESTOR FOCUS Leisure — 12
Height in m
33 0
Plans: Credit Suisse
33
6
11
4
Cross-section A
2
10
4
Height in m
0
9
8 8
5
7
Cross-section B
0
Height in m
0
33
Cross-section B
Cross-section A
Longitudinal section
3
1
2
A dimensional comparison: Sihlcity spans more than 325 meters, which corresponds in length to over three football fields.
25
50 75 100 125 150
Length in m
4
Longitudinal section

GLOBAL INVESTOR FOCUS Leisure — 13
1
2
3
4
5
6
7
8
9
10
11
Sihlcity Box
Opening: 22 March 2007
Investment volume:
CHF 620 million
Floor space: approx. 100,000
square meters
Number of shops: approx. 80
Investors: The Sihlcity Zurich
owners’ consortium comprises
the stock-exchange-listed Swiss
Prime Site AG (with a share of
real estate investment groups
managed by Credit Suisse:
Credit Suisse 1a Immo PK
(share 25.0%)
CSA Real Estate Switzerland
(share 16.5%)
Credit Suisse Real Estate Fund
Interswiss (share 12.9%)
Credit Suisse Real Estate Fund
Siat (share 11.6%)
Credit Suisse Real Estate Fund
Property Plus (share 9.8%)
Parking places: 850
Public transportation
connections: tram, buses and
regional train
approx.
41,000 square meters
approx.
24,000 square meters
Restaurants: 13
Apartments: 16
Four-star hotel with 132 rooms
Cinema with 9 theaters
Fitness and wellness center
Discothèque
Culture center
located on the edge of Zurich city and is
thus in perfect proximity to public transportation.
And that’s our advantage. A
development project with so few parking
places would have been impossible to
realize anywhere else. But even in the city
center with more parking spots, the “full”
signs are often lit up, and there’s no place
left to park. Although there are few
parking places, we offer customers a
home-delivery service at fair prices. Consequently,
enough people will be content
to leave their cars at home.
Sihlcity offers apartments, offices, shopping
and leisure activities all in one
complex. Has all the floor space already
been leased?
Conradin Stiffler: Yes, the whole complex
is already fully booked, from the
shops, through to the cinema, restaurants
and hotel. We don’t expect Sihlcity to
satisfy all of people’s needs. There will quite
possibly be people who live, work, shop
and enjoy their leisure time activities here.
The variety and mix of what Sihlcity has to
offer is what’s important. If the location is
good, then there will be ample reasons to
come here.
Does the current trend toward increasingly
viewing shopping as a leisure activity play
a role in your considerations?
Conradin Stiffler: We believe that there
are many people today who, at least partially,
define shopping as a leisure activity.
Many times after shopping, a person has
bought something that has personal value,
something that reflects some achievement
or something that represents the person.
My parents differentiated between making
purchases for daily sustenance and the
term “shopping” per se. When you went
shopping, it was to buy a suit for father or
bigger-ticket items, driving to the city
especially to shop. On the other hand,
buying your daily bread was regarded as a
different activity from shopping.
And today?
Conradin Stiffler: Today, everything is a
very mixed bag, and people like to hang
out at shopping centers when they are appropriately
designed. That’s why Sihlcity
also features a total of 13 different restaurants,
because customers who visit the
center want to take a breather after shopping
too. And they don’t necessarily want
to spend their time out at a bratwurst
stand – where they have to be on their way
again already after five minutes – but expect
variety from which to choose. There’s
also the possibility to combine shopping
with a visit to the cinema. I truly believe
that for many people today shopping is an
integral part of their leisure time activities.
Shopping is ultimately a form of social
interaction since people usually head to
such places in groups or they meet there.
No one goes shopping alone for long.
So Sihlcity is distinguished from other
traditional shopping centers by the aspect
of social interaction? But don’t people
consume products of various origins and
from different types of cultures?
Conradin Stiffler: Of course. That’s
why Sihlcity also has a culture center.
There are also plans to establish a public
library here, thereby adding an informative
element to the mix. The church also has
a presence, with an “oasis of tranquility”
open to everyone. This also includes
spiritual counseling rooms with appropriate
175 200 225 250 275 300 325
4
1
4

GLOBAL INVESTOR FOCUS Leisure — 14

GLOBAL INVESTOR FOCUS Leisure — 15
Photo: Thomas Eugster
amenities. Indeed, Sihlcity offers somewhat
more than your typical mall.
How have you selected the tenants?
Conradin Stiffler: Two elements are the
determining factors here: retail and gastronomy.
For the shops, we defined a mix of
sectors, and in a second step a tenant mix,
meaning which brands should be represented.
Not all of the tenants that we
targeted were able or willing to come to
Sihlcity. But in the end, we’re very satisfied
with the mix that we now have. In
terms of gastronomy, the restaurants are
oriented toward the two predominant
elements of table service and self-service
dining. We wanted something from every
corner of the world, and even fast food
should be represented.
Which age and gender segments have
you targeted?
Conradin Stiffler: We anticipate that
Sihlcity will be interesting for many older
people, particularly because everything is
available in one location. Sihlcity should be
a meeting place; one person can go shopping,
while another takes advantage of the
health and fitness facilities; the kids can
go to the cinema, while the parents meet
some friends at a café. I believe that Sihlcity
can also appeal to the 50+ generation.
The younger segment between the ages of
15 and 25 should be most attracted to the
various fashion offerings. This age group
demands a lot and wants it very fast. This
segment includes the hardcore virtual
shoppers with unbelievable stamina. The
middle-age group in between is distinguished
by a tight time budget. These
people have some money at their disposal,
but not many hours in which to spend it.
They are accustomed to finding everything
they desire quickly and under one roof. So
our shops are right in line with the trend.
“The church also
has a presence
in the mall,
with an ‘oasis of
tranquility’ as
well as spiritual
counseling
rooms.”
Men in particular, who are not fond of
shopping or spending much time doing it,
will be in good hands here.
Does the tenant mix have an influence
on customers’ buying habits?
Conradin Stiffler: We have a youthoriented
section, with shops like Tally Weijl
and Zara. Zara is a prime example. Ladies
in their 50s as well as 15-year-old girls
shop there. Today, buying habits overlap
among the age groups.
Consumer tastes are becoming increasingly
polarized. The trends are heading
toward either budget shopping or luxury
shopping. Such extremes can also be
seen in the leisure activities pursued by
many people: extreme sports events
and an evening at the opera go hand in
hand. Is Sihlcity able or willing to follow
such trends?
Conradin Stiffler: People follow trends
in any event; it’s no longer necessary to
lure them. Today, some things are socially
acceptable that would have been scandalous
in the past, for example, visiting a
bratwurst stand before going to the opera.
The spectrum is enormous. This is very
clearly manifested in the shopping trends
in the interim too, when we see which
bags people carry home with them. Luxury
brand names mingle with budget discounters.
But thanks to the breadth of
providers that we have aimed for with the
tenant mix, you can quench your thirst with
a very expensive bottle of wine in a restaurant
and, after watching a movie, still feed
your hunger at a burger stand. That’s what
we want to achieve – and not just in the
area of gastronomy.
What do you personally like the most
about Sihlcity?
Conradin Stiffler: The fact that there is
such a vast array of features pleases me
the most. What I think is cool is that the
entire complex is constructed like a city
within a city, and that outdoor areas have
been incorporated in the design concept.
In a traditional shopping center, I always
miss the fresh air; you can’t easily get outdoors
for a break and a breath of fresh air
and stretch your legs. Here, you can dine
outside in the summer. All in all, the shopping
experience has an urban character
that a traditional center just doesn’t have.
And what does the architect in you say?
Conradin Stiffler: The architecture is
the structure that provides the ambience.
Some old buildings have been preserved.
Architecture functions like a stage on
which the show now takes place. The
shops should be in the spotlight; the tenants
provide their color and their decor. I
believe that people don’t come just to look
at the mall; they want to shop and have fun.
The mall represents a neutral stage on

GLOBAL INVESTOR FOCUS Leisure — 16
Gender
Age in years
Net monthly household income
(EUR)
Source: Zukunftsinstitut GmbH, tns emnid, 2004
Personal time means … >
M
F
14 – 29
30 – 39
40 – 49
50 – 59
>60
2,500
> being able to concentrate fully on the
important things in life*
83
85
86
82
84
76
82
86
80
80
91 91
86
85
84
86
91
82
80
85
83
87
86
81
> being able to relax in a physical sense
> being able to do something meaningful
outside of work hours
81
73
72
75
72
86
80
80
75
75
80
78
83
78
81
80
77
93
78
69
82
86
91
81
> feeling free from the stresses and
strains of everyday life
> being able to recharge mental and
spiritual batteries
65
62
53
58
66
72
67
64
52
69
70
65
> as work takes up ever more time,
well-used personal time becomes more important
64
60
71
72
77
75
35
54
57
69
71
70
> to have enough personal time for oneself
is the biggest luxury
54
57
50
47
55
68
60
55
54
58
62
56
> to be able to have time for oneself alone
* agreement in %
24
46
23
26
41
43
40
37
31
38
45
31
The self-responsible society
How important is it for you to have control over your free time? Most respondents to a 2004 survey said they didn’t just want to use their leisure time
to relax and “kick back,” but to use their independence from the stresses and strains of everyday life to concentrate on the really important things – the things
that give their lives meaning outside of work. Only a minority is able to devote their spare time to themselves alone.

GLOBAL INVESTOR FOCUS Leisure — 17
Wealth is dead!
Long live worth
Time will be the key resource in tomorrow’s world. Striving for more free time – or time affluence –
will become the dominant trend of the future, affecting not just the consumer sector but financial
services as well. The contemporary ethic of pursuing material gratification and monetary prosperity
will become much less important than achieving a healthy balance between professional ambition
and individual well-being.
Eike Wenzel, Editor-in-Chief, Zukunfstinstitut, Germany
It sounds like the corniest joke in the world, but what people expect
from their leisure time activities in future is first and foremost more
leisure time. In the world of tomorrow, time will become the key
resource. Those who are able to enjoy an abundance of personal
free time will have “made it,” belonging to a privileged social class
since they live in the realm of time affluence.
This phenomenon is attributable mainly to a fundamentally
changing paradigm that has emerged in our society in the past
ten years. We are increasingly developing from a prosperous society
into a feel-good society. This does not mean that prosperity has
already permeated every aspect of our society and that we finally
find ourselves living in paradise. There is a lot more to it than that.
Striving for more autonomy, more personal free time, or time affluence,
and particularly a work-life balance, will progress into a predominating
trend of the future – affecting leisure time and consumer
markets as well as financial services. In this regard, leisure time
will undergo a remarkable change in significance:
From industrial labor to a feel-good society: leisure time is no
longer just the antithesis of hardship and necessity, or in other
words, industrial labor. Working time is increasingly becoming creative
time: Google today already allows its employees to spend
20% of office hours on creative idleness. On the other hand, there’s
a stronger trend toward spending leisure time with hybrid offerings
such as language courses and training sessions in a vacation-like
ambience.
End of the fun society: if the concept of leisure time reverts back
to its traditional connotation of “free time,” then a change in paradigm
will emerge. Instead of the thrill-packed cascade of leisure
parks, aspects such as self-understanding and self-development
will play a more significant role.
Sense and sensibility: leisure time in the sense of availability of
free time will increasingly lead to refocusing on the individual, a
person’s needs and a person’s body. On the other hand, in the postmaterial
society, leisure time will be reunited with traditional values,
such as a sense of solidarity, neighborliness and charitableness.
Researchers at the University of Tilburg in the Netherlands last
year surveyed a total of 1,128 men and 765 women ranging in age
from 16 to 87, inquiring about the way they feel at weekends and
during their leisure time. Roughly 3% of the respondents suffered
from symptoms diagnosed as so-called leisure sickness such as
fatigue, immunodeficiency, migraine headaches, rheumatism, even
nausea and manifest bouts of depression. The researchers presume
that the underlying cause of this leisure sickness is a problem
relating to people’s inability to tune out and wind down from workrelated
stress and tension during their free time. What sort of trend
leads to such an apparently paradoxical twist of values – leisure
as stress; work as sense of identity and self-fulfillment – from
which a person cannot escape? We have made the following observation
within the scope of the research carried out in the past
three to four years at the Germany-based Zukunftsinstitut and on
the basis of numerous studies and consultation projects: within the
contemporary lifestyle of material gratification, striving for material
monetary prosperity is much less important than the prospect of
achieving a balance between professional ambition and individual
well-being. This means that in the future, we will develop from a
prosperous society into a feel-good society. Let us be absolutely

GLOBAL INVESTOR FOCUS Leisure — 18
clear here – we do not live in a society where material prosperity is
all-encompassing and assured forever. Definitely not! But for the
vast majority of society, attributes such as individual happiness,
better ties to nature and the environment, a sense of solidarity and
a work-life balance will become more significant than material assurance
in the future.
From mass markets to individual quality of life
Photo: Thomas Eugster
Eike Wenzel is Editor-in-Chief at the
Germany-based Zukunftsinstitut. As a media
scientist he conducts research on changing
and advises companies in a vast array of
sectors. Mr. Wenzel is also author of numerous
studies, including “Die neuen (Frei)-Zeitmärkte”
and “Tourismus 2020. Die neuen
Sehnsuchts-Märkte.” See full biography on page 52
One mega-trend that is basically driving this shift in mentality is
individualization. We are increasingly transcending a society of
mass media and mass marketing to a new feel-good culture and
individualized quality-of-life offerings. The fundamental parameters
of our lives are beginning to change meaning. That is, shifting away
from a mass media-based prosperous society toward the individualized
realm of well-being. In this regard, the following three factors
are especially significant:
The monolithic leisure time culture is unfolding into a more
open realm of individual self-management (a lifelong process of
learning; a new sense of solidarity; wellness becomes selfness;
web communities supplant the mass medium TV; new mobility solutions).
Personal free time, reclaiming sovereignty over time, does not
necessitate a new cult of ego, but rather answers people’s needs
for more self-responsibility and self-determining intercourse with
health and leisure.
Leisure time in the society of the future will therefore become
condensed time – time filled with a sense of life. Hence, the explicitly
expressed need that emerged from the results of our leisure
survey was the ability to concentrate on the really important things
during free time. In the coming years and decades, future markets
catering to personal free time, selfness, inner growth and selfresponsibility
will emerge from the traditional leisure time world of
industrial society.
New luxury shuns material values
The shift toward immaterial values in leisure time activities calls for
some new terminology on the agenda, with which providers of leisure
time services should become familiar. “Inner growth” is an
example of such terminology, which describes the far-reaching
shift in significance in our leisure culture from values based on external
status to an all-embracing perception of personal being, and
from fleeting monetary attributes to established emotional values.
This also means that our sense of luxury will undergo a fundamentally
new reorientation under the influence of the changing needs
of leisure time activities.
This “new sense of luxury” is what that the majority of respondents
to a Zukunftsinstitut/Enmid survey associated with personal
free time: “Free time means that I can focus entirely on the things
that are important to me (85%); physical relaxation (83%); and
doing something worthwhile outside of work (81%).” This trilogy
contains the most significant values associated with leisure time or
personal free time (see page 16). We know that men and women
follow the beat of different drums. In the industrialized cultures of
the 19th and 20th centuries, men (or the breadwinners) were the
ones who took advantage of leisure time. For only men were involved
in the labor processes and consequently were entitled to
some relief in an existential world outside of work. Women were
simply not a leisure target group – and this held true at least until
the mid-20th century – because they were not regarded as belong-

GLOBAL INVESTOR FOCUS Leisure — 19
ing to the sphere of production. The tasks of housework, childcare
and mood management were carried out in a timeless world, day in
and day out.
However, our survey conducted in 2004 revealed that men and
women are becoming increasingly similar in the way they utilize
leisure time. In terms of the perceptions of what leisure time and
personal free time mean to the individual, the differences between
men and woman are no longer profound. Nevertheless, it is true
that men are more likely to interpret leisure time and personal free
time in the physical sense, based on activities and events, while
women relate more consciously to “mental” categories such as
body, inner self and spirit. The greatest disparities between men
and women with regard to the concepts of leisure emerged in the
definition “leisure time means: being entirely devoted to oneself.”
In terms of responses, 46% of the women supported this conclusion,
but only 23% of the men agreed. Women can quite obviously
relate more to the topics of self-care and focus on themselves.
Men interpret relaxation more strongly in pragmatic terms and associate
it directly with physical recreation: 85% intuitively affiliate
leisure time with physical relaxation.
Space travel and underwater hotels
By the year 2020, the newfound power of consumers will lead
to long-lasting changes in the leisure activity markets and especially
the tourism industry. We are currently experiencing consumer
empowerment, which is characterized by the desire to have their
aspirations taken seriously. In other words, they are not yearning for
immediate fulfillment of their needs, but rather stimulation of their
desires under different conditions – a better life, even if it is only
possible for a limited time during a family vacation or brief trip.
In this regard, here is one example of how to ideally satisfy consumers’
increasingly complex leisure time needs: Bill Fischer never
had an interest in the notion of bucket holidays. He sells high-end
tours to super-rich and sophisticated travelers. Mr. Fischer finds
the classiest resorts and offers a solution for every desirable service.
His customers reward his efforts: they pay an annual “initiation
fee” of USD 50,000 and enjoy a totally individualized offering
of leisure activities.
Despite all the crises, terrorism threats and varying consumer
tastes, longing to see faraway places will remain the predominant
motive in the future world of leisure. Experiencing lands of contrast,
seeking a much-needed change of scenery, encountering foreign
cultures, gathering new sensory input – all of these factors constitute
an important key to luring customers in the society of the 21st
century. In terms of the array of offerings, the tourism/leisure industry
will develop into a vast jungle market in the coming years –
with every single niche and pool accessible via at least one service
provider. Every spot on earth – and beyond – will be covered; celestial
hotels and outer space flights are no longer science fiction (Virgin
Tours, for example: price per flight: EUR 198,600). The same holds
true for underwater hotels and ice golfing in Greenland.
Battling commuting stress with private wanderlust
The future markets for leisure time activities will be defined by the
issue of mobility. The postmodern conquerors of the world will
emerge and battle mobility stress with wanderlust. The new premium
target group in the tourism industry not only feels at home in
the world, acts nimbly and boasts an affinity for experiences; this
group also no longer perceives vacation as a singular, once-a-year
What the leisure consumers of tomorrow
really desire:
The role of spectator
will be spurned. Culture, pleasure and fun
are fundamentally regarded as communicative
and social “events.”
Mass events, mass
media and mass marketing will be rebuffed
with disregard because they hold no personal
experience value.
A strong sense of
values is not based on a conservative, compulsive
culture. In fact, this trend leads to new
consumer habits that have direct effects on
leisure time activities.
Anything that relates to the
self-achievement can only succeed with a
sense of harmony between inner and outside
worlds.

GLOBAL INVESTOR FOCUS Leisure — 20
International tourism receipts (US dollars)
21.4%
3.0%
4.2%
534.6 bn
20.8%
20.4%
3.0%
4.0%
634.7 bn
51
21.2%
.8%
20.6%
3.2%
4.0%
682.7 bn
51.0%
Source: World Tourism Organization (UNWTO) / Tourism Market Trends, 2005 / Tourism Highlights, 2005
18.4%
2.2%
3.7%
2.4%
4.0%
53.0%
481.6 bn
23.3%
488.2 bn
27.2%
20.7%
18.7%
48.2%
2.4%
3.9%
49.6%
25.5%
469.9 bn
19.8%
48.4%
International arrivals by region (in millions)
800
600
Europe
400
Asia and the Pacific
200
Americas
0
Africa
Middle East
1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
The desire to travel is steadily taking off
More and more people have the opportunity and the desire to go on vacation. Average annual holidays are becoming shorter, but people are taking more
city breaks and engaging in cultural tourism. Encounters with foreign cultures and the search for new experiences, as well as the ability to distance oneself
from the strains of life, will be the mainstay of the tourism market in future.

GLOBAL INVESTOR FOCUS Leisure — 21
highlight. The vacationers of the future are persistent consumers
of mobility options. They compensate for work-related travel stress
with wanderlust, regardless of the destination. The primary objective
is to distance oneself from the day-to-day routine, because only
from a distance can a person fulfill the need to refocus.
Data on disposable incomes, expenditure per trip and spending
per capita per day underscore this trend. Not all travel agencies
will be pleased about the cutbacks on travel time for primary vacations.
But in fact, a stable trend can be anticipated, whereby the
postmodern world conqueror will increasingly switch to alternative
offerings beyond the standard selection provided by the tourism
industry (half room and board, sun, beach). This phenomenon cannot
be attributable solely to the noticeable boom in city or cultural
travel. On the other hand, it should not simply be overinterpreted as
the impact of a mega-trend.
Indeed, with the postmodern world conqueror, we have uncovered
a fundamental shift in mentality on the part of the customer
toward aspirational adventures. And this is characterized by the
fact that particularly wealthier, sophisticated target groups with a
basically new perception of leisure, vacation and relaxation have
emerged in the travel industry. So what does the demographical
physiognomy of the postmodern conqueror look like? According to
a 2002 survey by media research firm AWA, short-duration vacationers
show up in all age groups between 18 and 60+, with the 50
to 59 year olds (index: 117) and the 18 to 29 year olds (index: 114 )
showing the strongest affinity for short trips. Of greater importance,
more highly educated people with university degrees are without
doubt most likel y to take short vacations (index: 161). People earning
good wages, with monthly household net incomes in excess of
EUR 3,000, are the heavy users of short vacations (index: 141).
Particularly noteworthy is that people with a fondness for vacationing
more than five times a year have a strong orientation toward
innovation, since it is primarily innovators (index: 236) and so-called
trendsetters (index: 174) who fall into our designated category of
postmodern world conqueror. By comparison, the group regarded
as the vast majority (index: 76), as well as the stragglers and abstainers
(index: 37), have so far been little tempted by short vacations.
What we have described as the postmodern world conqueror, especially
within the scope of tourism, has been recently referred to in
sociodemographic literature by a vast array of ambivalent abbreviated
forms and coinage. We are fond of the acronym LOHAS
(lifestyle of health and sustainability). Research carried out in the
US and Europe estimates that in the medium term one-third of the
world’s population will adopt this lifestyle. The new consumer type
has also been reported as the “health hedonist” in the pages of the
New York Times. These are health-oriented aficionados, to whom
health and pleasure are equally important, who savor individual
well-being and the destiny of mankind, and who maintain a family
and their own career. American sociologist Paul Ray and psychologist
Ruth Anderson coauthored a book in 2000 with the subtitle
“How 50 million people are changing the world.” Ray and Anderson
also describe these hybrid consumers as “cultural creatives” and
estimate their numbers in the US at roughly 50 million people (NB:
the adult population over the age of 15 in the US amounts to 219 million)
– equivalent to a “small France.” They are inspired by creative,
responsibly minded, health-oriented and pleasure-seeking people.
During their study, Ray and Anderson conducted the most comprehensive
up-to-date survey in the last 20 years on shifting values in
the US. These surveys comprised findings from 100,000 Americans
and more thorough analyses of more than 500 target groups. Ray
and Anderson discovered that three subcultures exist side by side
in the US today. Each lives in a world of its own and has a different
mindset. These subcultures are referred to as the so-called traditionalists,
the modernists and cultural creatives (or LOHAS). Indeed,
the new consumer elite can also be aptly characterized by the way
they change our society, economy and labor market.
Rise of the creative class
Richard Florida described it as such in 2002 in a book titled “The
Rise of the Creative Class.” For the American sociologists, the new
creative class counts 38 million members among its ranks, or 30%
of the total workforce in the US. Even though Mr. Florida’s creative
class is not identical with the LOHAS, there are numerous similarities
between the two groups which can be useful in defining the
new lifestyles. Included among Richard Florida’s creative class are
doctors; designers; writers; IT specialists; people in the TV, film
and advertising business; wellness, health and fashion advisors; as
well as carpenters, restaurant workers and hairdressers. The focal
point of their work lies in the fields of service that are most in demand:
consulting, conceptualizing, designing, inventing and providing
therapy, training, etc.
For the leisure time people of tomorrow, there are two predominant
sanctuaries, two yearning metaphors. The first is destination I,
the awakening of the inner self, a journey of discovery of an especially
unique nature. The second is the quest for the authentically
different, the search for unknown realms, places and identities. We
will learn in the foreseeable future how we supplant sensation with
a sense of meaning, substitute hysteria with down-to-earthliness.
The new consumer elite re-define work and leisure

GLOBAL INVESTOR FOCUS Leisure — 22
Others
5%
Middle
East
Japan
4%
Russia
5%
Others
26%
6%
Middle
Russia
East
7%
5%
USA 25%
Japan
USD 112 bn
China
11%
20%
Spending on luxury goods 2004
Spending on luxury goods 2014
USA 22%
USD 208 bn
23%
Europe
China 23%
18%
Europe
Source: United Nations, World Population Prospects, 2006 / Merrill Lynch, 2006, Data in euros converted to US dollars at an exchange rate of 1.303
Resident population by world region by the year 2050 (in millions)
5000
Asia
4000
3000
2000
Africa
1000
0
Europe
North America
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
No saving on luxury goods
The market for luxury goods is growing. Particularly in Asia and Russia, more and more people can now afford exclusive products. By the year 2014,
China’s share of the worldwide luxury goods market will have grown to roughly 23%, thus surpassing the USA, Europe and Japan.

GLOBAL INVESTOR FOCUS Leisure — 23
Asia warms to
the cool life
The future of Asian leisure promises a mixture of wealth and creativity. Society’s changing
attitudes are driving the development of new leisure options and ideas, supported by the wealth
accumulated from more than 50 years of hard work and toil. In line with a generational shift
towards greater financial security, the region’s youth are shifting from surviving to living. Business
and social networks are beginning to merge into one.
Foong Wai Fong, Director, Megatrends Asia
“Check in with your wife and leave with a different woman,” cajoles
a playful message in the advertisement of a five-star spa resort in
Thailand. The promised transformation for the lucky lady epitomizes
Asian leisure in many ways. Like cosmetic surgery, in just half a
century the face of leisure in Asia has evolved from simple, rural
fun to sophisticated, global play. For many, going from subsistence
to abundance has taken only a few decades. We recall nostalgic
images of the occasional top-spinning and kite-flying in the rural
fields which often climaxed with a long street feast to celebrate
harvest. Today, we behold new and moving pictures of Asia’s elites
riding on their Harley-Davidson machines crossing the old silk road,
with a stop at an Ayurvedic spa resort up in the Himalayas. The
riders are perhaps in time to circle back to catch the wind in the
Monsoon Cup on the eastern coast of Peninsular Malaysia before
heading down to catch the “Phantom of the Opera” at the state-ofthe-art
Singapore National Theater. Asian leisure is entering a new
era, with changing attitudes driving the development; demanding
new leisure options and ideas supported by wealth accumulated
from the last half century’s sweat and toil.
China, India and the rest of East and Southeast Asia combined
have half of the world’s population; as many as one billion of these
Asians are joining the ranks of the middle class. While their parents
and older siblings are still working and saving hard, the younger
generation, from Harbin to Hanoi, from Shanghai to Singapore,
from Bangkok to Bangalore, from Manila to Mumbai and Tokyo to
Tehran, have decided that it is more important to have a cool lifestyle.
A meaningful job is more important than simply earning to
put food on the table and have a secure home. In the wake of the
generational progress towards greater financial security, the region’s
younger mindset is shifting from surviving to living; from working
hard to enjoying and playing.
A new sense of value
Asia is among the world’s hardest-working regions in terms of average,
clocked-in workdays. Asians are also the world’s most ardent
savers, putting some 30% to 50% of their annual earnings into the
kitty bank to prepare for retirement and rainy days. As a result,
they have the world’s largest holding of foreign reserves. A byproduct
of Asia’s domestic, demand-driven growth policies, official
government messages tout the dawning of a prosperous new era.
Some go as far as to declare that Asia and China are entering a
period more glorious than the times of the Tang dynasty when the
middle kingdom was at its peak. Overall, the sense of values of
urban Asians is changing and their lifestyle is diversifying. According

GLOBAL INVESTOR FOCUS Leisure — 24
to one regional survey of people’s daily lives, the largest single
group of respondents stated that in the future, they wanted to live
a life focused primarily on “leisure.” After more than 20 years of
reform and opening in China, the GDP per capita in the eastern
coastal cities has crossed the USD 5,000 level as both affluence
and aspirations rise. This indicates that more people want to spend
more time enjoying themselves with others or engaging in hobbies
and recreational activity. This attitude represents a new opportunity
for building a society where people can enjoy the riches of
daily life, and are not merely working to build economic wealth. In
other words, what do you do with your wealth now that you have
created it? This new sense of value has tremendous implications
for investment and structure for the provision of leisure.
Baby boomers are becoming grandparents and want fun
Photo: Thomas Eugster
Foong Wai Fong is the Director of Megatrends
Asia. Her research areas include macroeconomic
trends in Asia, the progress of
reform and changes in China, cultural
industries and sustainable development.
She has three best-selling books to
her name: “The New Asian Way,” “We Have
to Talk, Mr. Prime Minister” and “Culture
is Good Business.” See full biography on page 52
From the old days, we can still remember cases of death from
overwork and fatigue among Japanese and Taiwanese corporate
warriors. People are more relaxed now. Asian baby boomers are
retiring and are becoming grandparents. Many have decided to
lead a more relaxed lifestyle and begin exploring and traveling
while they are still physically strong. Asian society is aging at an
increasingly rapid pace thanks to a lengthening average lifespan
and a declining birthrate. For example in Japan, the nation’s total
fertility rate in 1998, at 1.38, was the lowest on record. According
to Japan’s projected future population, one in four people in the
Land of the Rising Sun will soon be 65 or older, the largest proportion
ever. This is a golden consumer group. With wealth and a more
open attitude to spending, they are pushing for higher value, more
luxurious new apartments, and higher quality travel options.
Younger Asians’ propensity to save has noticeably decreased in
China, and many are running into deficits at the end of each month.
They are known as the yueguangju (empty-every-month gang),
who would not blink an eye throwing an entire month’s earnings on
a designer bag or a new electronic gadget that they enjoy. Aspirations
are to own a credit card, have lots of cash, drive an imported
car, live in a condominium and with a lifestyle saturated in class:
the so-called “6 Cs” lifestyle. The new rich are making waves in
the market; the new millionaires that were created by the region’s
economic growth are now supporting the most robust market in
luxury goods. Whether it is a new Louis Vuitton bag or a Rolex
watch or a pair of glittering Jimmy Choo shoes, the purchase fulfills
the desire for status and reward.
The new temple of desire
It is called retail therapy in many parts of urban Asia. Offering the
opportunity to stretch your legs away from the heat outside, airconditioned
shopping malls are most attractive to Asians enjoying
one of their favorite pastimes. These temples of consumerism are
an irresistible draw, especially for the lower-middle-class groups.
Here are the theaters where Asian dreams come alive. The precincts
are getting bigger, better and cheaper. Even the new Suvarnabhumi
airport that opened in October in Bangkok has several miles
long of shopping pavilions.
For the nouveaux riches, they can buy ten Hermes ties in one
shopping stop! From Chanel to One-Dollar shops, each meets his
own needs, having fun accumulating material goods. Asians, especially
single and wealthy women, have a habit of rapidly changing
their material belongings, going for the latest models in vogue.
After a long day of window shopping and bargain-hunting at the

GLOBAL INVESTOR FOCUS Leisure — 25
commonplace all-year-round sales, shoppers can be treated to the
most wide-ranging edible offerings in Asia’s unique food courts.
For example, in Suria Kuala Lumpur City Centre, the lively shopping
mall below the twin towers, the food court is a vivid picture of
globalization and Malaysia’s Asiatic variety. Some 28 outlets are
organized in a well-laid-out, pristine food court, offering over 200
different types of local and international cuisines. For Asians, nothing
brings greater satisfaction than a good meal!
Lonely hearts like to be amused too
In Taiwan’s three largest cities, there are over one million people
considered lonely hearts. The survey of a leading magazine revealed
that some 20% of the population, 4.5 million of them, do not
have a sense of belonging. In one year, the island sold some NTD
2 billion worth of antidepressant drugs. That figure is increasing at
the rate of 10% per year. For every nine family households, there is
one comprising a sole occupant. Lonely hearts are driving big-time
leisure business: the market for pets is worth NTD 20 billion, soft
toys NTD 600 million. Some 3.5 million people log onto the Net to
chat every day, generating some NTD 1.2 billion in revenue for the
online dating business. Luxurious suites for singles are worth NTD
60 billion, while night owls around the city consume NTD 3 billion
annually. Music for healing is outselling the most popular teenage
pop singers. People are abandoning material consumption for fulfillment
of the senses and spirituality, by putting atmosphere, space,
taste and class first among their considerations for leisure options
and engaging in activities that will bring a sense of well-being and
happiness. All across the region, the largest growing real estate
sector is for “that one single person”; one that buys a luxurious
designer-oriented apartment suite to nurture the lonely heart. 1
The venerable Chinese game of mah-jongg (similar to Western
bridge, but played with mini bricks) can now be played on the Internet
and with virtual partners. Technology is radically changing
the face of Asian leisure. Plasma TV, high-definition screens, all
those stylish iPods, plus the multifunction mobile phones which not
only keep you updated with important events but also provide a
channel for pouring your heart out. The SMS text messages sent
out in China are now a multibillion dollar business. About 500 to
800 million people in China alone are connected by mobile phones
and another 150 million via the Internet.
iPartment allows virtual relationship
In 2006 the number of Internet users in Taiwan exceeded 14 million,
about half the population. Around 32% of Net users use MSN and
Skype. Between 8 and 10 pm, 3.5 million people log on the Net to
chat. The dating business went from nothing to NTD 1.2 billion in less
than four years. Taiwan Yahoo! has 1.3 million members joining its
friendship portal. The iPartment (“i” means “love” in Chinese) Internet
service allows participants to maintain a virtual relationship.
There are some 89,000 members each paying a monthly fee of
NTD 90 for its VIP membership, enabling iPartment to generate
NTD 10 million in revenue in a very short time. Sony’s electronic
dog “Aibo” created another craze, selling 130,000 models in five
years. During the vacation, people stay home to chat online; 1.26
million people have a log-on record of more than eight hours in a
single day. In pet rooms, for a dollar a day, you can keep a virtual
pet. There are now 8,000 pets available for adoption. There is a
whole new world on the Internet. You can chat or text via your
desktop, notebooks, smartphones and mobile
Continued on page 27
business magazine came up with
the following cool industries of the future:
1. Movie and TV. Big casts and big productions on popular Asian
themes have led some productions to do extremely well. Asians are
also eager and hungry for more culturally compatible presentations
after having gotten enough of the artificial super-creatures (such
as Spider-man and the like) in Western productions. Coproduction
and cross-cultural collaborations are also in vogue. With Taiwanese
directors, the movie cast can be drawn from among popular heartthrobs
from Hong Kong, Taiwan, Korea, Thailand and Southeast
Asia. Asian movies are entering the big time.—2. Games, girls
and gambling. The 3 G on the Internet does not refer to third
generation mobile telephony but games, girls and gambling. A domestic
market is being created with local productions, where games
from Beijing and Shanghai now take up 80% of China’s domestic
market. Asian and Chinese expertise is also coming of age in this
sector.—3. Animation. This will be the strongest revenue driver
on the Internet and mobile phone platform (counting local networks,
China has between 500 and 700 million mobile phones and over 100
million Internet users). In 2004, animation sales exceeded RMB 10
billion; up to RMB 60 billion in 2005. A huge animation city of 32,000
square meters opened on 1 October in Guangzhou city to house one
of the most concentrated production hubs for the animation industry.
Besides Guangzhou, many other Chinese cities are working
on leveraging their folk culture to produce great animation works.
—4. Beauty. Beauty pageants are like flowers blooming all over
the region. Every city and province is holding its own beauty pageant,
drawing financial rewards from sponsorship and tourist visitors.—5.
Holidays. For example, in China, the compulsory national
holiday weeks of 1 May and 1 October are entering their seventh
year now. One estimate puts the number of travelers at 1.7 billion,
generating RMB 429.2 billion in consumer spending in the last 14
golden weeks. Every holiday becomes a big commercial opportunity.
Consumers are conditioned by advertising to take on this new
habit. 4
The future of leisure promises richness and
creativity. Stay tuned.

GLOBAL INVESTOR FOCUS Leisure — 26
100.00
10.00
1.00
2.2
4.1
0.8
7.5
1.4
11.4
2.1
17.0
3.2
0.6
23.8
4.6
1.1
30.7
6.5
2.1
36.3
8.0
2.9
42.2 45.9
11.5
10.0
5.4
4.3
53.8
13.8
6.7
8 x
Source: ITU International Telecommunication Union, 2006
73 x
0.5
0.3
0.10
0.1
0.06
0.03
0.01
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Industrialized nations Worldwide Emerging countries
100.00
49.6
58.5 64.7 69.6
76.8
10.00
8.2
17.6
24.6
5.4
35.3
8.2
12.2
15.7
8.0
18.8
10.8
22.6
14.2
27.4
18.8
4x
5.2
3.7
5.4
2.5
3.2
1.6
1.9
1.00
27x
1.0
1.1
0.6
0.4
0.10
0.2
0.01
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Industrialized nations Worldwide Emerging countries
Digital gap between rich and poor narrows
Internet – users per 100 residents: In 1994, 73 times more people in the industrialized nations had access to the Internet than in the emerging countries.
But ten years later, the disparity between rich and poor was merely eight times so large. Mobile phone – users per 100 residents: In the mid-1990s,
the proliferation of the mobile telephone among the population in the industrialized nations was 27 times greater than in the emerging countries. By 2004,
the digital gap had narrowed to a factor of four.

GLOBAL INVESTOR FOCUS Leisure — 27
phones. The end of the year is always an eventful time as schools
break and adults treasure this an important time to get closer to
their children. It is the annual school holiday in many of the Southeast
Asian urban centers. The younger urban families are packing
their bags and heading out to the airports for the annual family
holiday. With fewer children, younger middle-class Asians are making
family vacations an annual ritual. Adventure travel, exotic destinations
and more out-of-the-way options are being introduced.
Soon Singapore will launch a private enterprise to help people get
a tour of outer space in its space tourism project.
Drinking coffee in the library
Business, health, socializing and networking are beginning to roll
into one. Asians, however, like packaged services – having things
organized and laid out for them. For example, South Asia’s most
successful fitness chain, Alexander Groups, has 240,000 members
and 33 clubs in Taiwan, Shanghai and Beijing. Carefully designed
package activities include offering gym, aerobics, group cycling,
swimming, jacuzzi, sauna, spa, weight management, children’s
health, and nutrition and juicing services. Combining business with
leisure, the massage centers in China often have special VIP rooms
where executives discuss business while the masseurs press on
their feet to ease blockage and boost blood circulation.
Starbucks Coffee shops in hospitals, DOME café stations in
banking halls, airports turned into huge shopping malls; these are
some of the ways that Asians mix work and formal business with a
little leisure and relaxation. There are more sidewalk benches available
for people to relax. Museums hold theme parties and have
special restaurants. Public libraries have moved to shopping malls,
while special cafés within bookshops open late into the night. Work
can now be set in a leisurely environment.
The young Asian generation will prize quality of living over the
life of a workhorse, and value meaning over accumulation. As the
region heads to the future, for many of the urban middle class, the
driving force behind economic growth will come from services.
Much of this development will be driven by the creative and leisure
industries. In many parts of Asia, China in particular, advertising
and government messages are helping to shape this trend by
promising the dawning of a glorious and prosperous new age. This
is part of the atmospheric support for the government’s effort to
generate domestic demand as an engine of growth, as these messages
are helping to shape new attitudes towards leisure. There is
the danger of economic slowdown coupled with overspending. In
spite of this risk of a hard landing after the buildup of unrealistic
expectations, the future for leisure in Asia remains promising.
trends. The Hunan Satellite TV’s Super Female vocal contest
reached 19.45% of the national population and generated NTD 760
million in revenue. 2 The Ministry of Culture in China estimates that
the creative industry was worth NTD 7 trillion 3 in 2004, and is growing
at double-digit rates annually. The enormous potential and size
of the Chinese economy have set the stage for entrepreneurs and
businesses to innovate on China chic or Chinese ideas in leisure.
The world will see this renewed confidence translated into an enormous
offering of Chinese ideas in leisure, where western-originated
modern technology will be applied to bring to life outstanding ideas
from China’s 5,000 years of knowledge and cultural accumulation.
With a potential middle-class customer base exceeding one billion,
there are justifiable reasons for excitement.
Even Asians are surprised that cool stuff is emerging from the
most unconventional places. A song entitled Laoshu ai dami (Mouse
Loves Rice), written and sung by a complete unknown, was widely
downloaded on mobile phones and generated some RMB 150 million
in revenue. The masses are participating in leisure and joining
the party via new technology platforms; meawhile, providers are
working to sharpen their niches in a highly competitive marketplace.
For example, the television stations in China are going for
select positioning, making sure they can carve and keep even one
space within a rapidly emerging market. Chinese movies which celebrated
the centennial in 2005 are making a big comeback. The
big Chinese movie “Hero” took RMB 250 million out of the total
RMB 900 million box office sales in China and internationally it
ranked 26th out of the “50 must-watch movies in your life” listed by
Sister Liu attracts millions of spectators
On the banks of the Nijiang River in Quilin, set against a picturesque
landscape, director Zhang Yi Mou created the largest and most spectacular
show of Liu Shan Zhei Theatre. It is a spectacular outdoor
musical, featuring the legendary folk songstress Sister Liu. The
show, not even three years old, has already attracted some 1.5 million
spectators. The success of this artistic project has also increased
local real estate values fortyfold and created tremendous
revenues for local tourism coffers. In Hunan province, the Super
Girl vocal TV open contest has attracted the participation of millions
of young and old people. Millions have the remote control in
one hand, busy texting their vote for their favorite talent with the
other. The show has created a new phenomenon in Chinese leisure
1
Global Views Monthly (April 2006)
2
Ibid, page 125, http://www.cwgv.com.tv
3
Special Issue, Nov. 2006, Global Views Magazine, Taiwan, Creative China
NTD 7.2 trillion converted into USD. Page 29
4
Ibid, page 59

GLOBAL INVESTOR FOCUS Leisure — 28
Successful high-tech firms need to continually reinvent the categories they have created,
providing consumers with new uses for the technology. Interview with Guerrino De Luca,
President and CEO of Logitech International. Interview Ulrich Kaiser, Credit Suisse Research
“We have a fundamental
mission to make technology
simple.”
Photo: Thomas Eugster
Ulrich Kaiser: Wireless connectivity,
Internet communication, digital music and
the digital home are key drivers of
Logitech’s success. Why are they so
important?
Guerrino De Luca: The need for people
to cut the cord is paramount. Consumers
do not like to be tied down, and the more
wires they can eliminate, the better. We
have made cordless mice and keyboards,
but cordlessness in general is becoming
part of the entire portfolio. Any technology
that enables people to get in touch with
other people is a winner. On the Internet,
communication takes place for free – just
think of voice-over-IP. The fact that on the
Internet you can not only talk to other
people but actually see them is instinctively
compelling for most humans. This is
a huge trend which certainly helps our
webcam and headset businesses.
What about digital music?
Guerrino De Luca: Music had been
quiet for a long time and then all of a
sudden, there was a big transformation.
Music is not just physical, it is digital and
can be enjoyed in many different circumstances:
on the go, at home, with different
means, in different infrastructures. This
has driven a huge business for speakers.
Music arrives at the PC before reaching
portable players. Most people enjoy their
music on the PC. But when they listen
they want better quality than the computer
itself provides. This is where we can make
a difference through our speakers, and
wireless headphones for the iPod and
other MP3 players. Once you have all your
music on the PC, you want to distribute it
throughout the house. So now hi-fi equipment
needs to be revitalized in line with
the streams of digital music coming out of
the PC and via the Internet. We recently
acquired a small company called Slim
Devices, enabling wireless distribution
from source to speakers.
What are the future growth opportunities
for Logitech and what are its biggest
threats and challenges?
Guerrino De Luca: The biggest challenge
for us is to continue reinventing the
categories that we have defined, and provide
the consumer with fresher uses of
technology. This is not a technology-driven
business. What is important is what the
user wants to buy. You have to use technology
so that consumers can understand
it. The growth of notebooks is an opportunity
for us. There are 900 million PCs out
there, and we have only penetrated a fraction
with our products.
Do you notice any differences in PC use in
different regions of the world?
Guerrino De Luca: In the developed
world, the PC is more pervasive than any
other technology platform I know of. It is
everywhere, not only in the office but also
at home. There are countless households
in the Western world that have more than
one PC. That obviously drives an incredible
usage not only for work but for entertainment,
communication and games. The
developing world is now equipping itself
with PCs for home use, but our biggest
opportunity is where the PC is all but ubiquitous.
When everybody has a PC, our
products become interesting. This is why
the strongest growth is currently in the
West, as opposed to many PC manufacturers
whose growth fundamentally takes
place in the developing world.
Many people aim to use their work and
free time more effectively as time is
getting scarcer. What new product could
help to optimize the use of time?
Guerrino De Luca: Our “Harmony”
remote can do that. It is a big simplifier –
you can enjoy your entertainment without
having to study 75 manuals and having to
use 14 remote controls. People have to
make choices as to what to do with their
time. We notice that especially younger
people spend much more time on the PC
than in front of the TV. This is good
because the PC is an interactive device.
Television is totally passive – nice when you
want to relax, but when it comes to stimulating
your brain, the two don’t compare.
Apart from the Harmony control, are there
any other products in Logitech’s pipeline?
Guerrino De Luca: Logitech makes
100 new products every year. I could
already tell you what we have in store for
Christmas 2007 because we finalize our
roadmaps between 16 and 20 months

GLOBAL INVESTOR FOCUS Leisure — 29

GLOBAL INVESTOR FOCUS Leisure — 30
before the products become available. I
am more excited than ever by the things
we make! There are evolutions, even in our
core product, the mouse. People might
think: “what are you going to do with the
mouse?” Well, expect mice that can
navigate 3D virtual realities. There is a
product we have just introduced called
“SpaceNavigator,” and it works beautifully
with Google Earth. Our SpaceNavigator
makes 3D navigation easy. We are also
developing products that will enable you
not only to use your PC on your desk, but
sitting on a couch using a television
screen. We will innovate along those lines
very aggressively in 2007.
Why is the PC industry migrating from
desktops towards notebooks? Does this
pose a threat to your business model?
Guerrino De Luca: Originally, notebooks
allowed business people to bring
their work with them as they traveled. That
has not changed. What is changing is the
fact that at home, consumers now find a
notebook affordable and powerful enough
to be their computer of choice. So instead
of buying a desktop, which is bigger and
occupies more space, they use a laptop
they can bring from room to room. With
the growing importance of Wi-Fi installations
at home, people also use their PC in
their bedroom and in front of the television.
But as the laptop is basically a replacement
for the desktop in terms of functionality,
people do the same thing. The
tendency to accumulate peripherals around
it is exactly the same. In fact, desktops
present a tougher sell for us. All PCs come
with a mouse, so we have to convince you
that the mouse you have is not good
enough and that you need an upgrade.
Laptops do not come with a mouse but
with integrated pointing devices most
people do not want to use on a regular
basis. So they buy mice, which is a great
additional opportunity for us.
With new products like HDTV, people’s
home entertainment systems are becoming
richer but also more complex. What are
your solutions to this complexity? Does
Logitech benefit from this development as
well?
Guerrino De Luca: Absolutely. I mentioned
“Harmony”: I strongly believe that
the digital home will become a platform
very much like a PC is a platform. What is
a platform? It is a combination of content
and devices that you need to control. The
mouse controls the PC. What will control
“Ten years from
now we will all
consider video
communication
as popular as
e-mail is today.”
the digital home? When I say digital home,
I mean movies that are stored in some
server, music streaming from the Internet,
multiple places where you want to listen to
it, speakers in the bathroom, the bedroom,
the kitchen. This complexity needs to be
controlled. I believe that there will be a
“mouse” for the digital home. “Harmony” is
the beginning of that trend: a device that
can control the source and destination of
all your entertainment in the digital home.
Why is Internet communication so popular?
What is the future of this trend?
Guerrino De Luca: The most compelling
application of computers is communication.
In fact, e-mail is probably the
single biggest thing that you do on your
PC. It is not word processing; it is not
spreadsheet analysis; it is communication.
Communication applications are incredibly
appealing to people. The Internet as a
platform makes communication richer and
more affordable. You can speak, exchange
videos, see one another. Remember,
people have been talking for ages about
the videophone. There has been experimentation
in videophones; everything has
failed. Why is that? The reason is that first
of all, in order to enjoy videophones, both
of us need to have one. In the case of the
PC, everybody has one, so you already
have the tool that enables you to see the
other person. The second reason is a little
bit more subtle: when you speak on the
phone you hold your handset close to your
ear. So how do you see one another when
you hold your handset close to your ear?
If you are in front of your screen, your posture
is much more conducive to visual
communication. I believe that in the long
run, visual communication will be a
standard application on every PC, which
provides us at Logitech with a great opportunity
for embedded webcams, as well as
for webcams that can be bought separately.
This trend is here to stay. Ten years from
now we will all consider video communication
as popular as e-mail is today.
Logitech also makes products for the
gaming industry, such as game controllers.
Many computer games are very timeconsuming.
Is there room for this in a world
where free time is so scarce?
Guerrino De Luca: Playing is part of
human nature. If you prohibit games,
people will play when they should be doing
serious work. Firms who forbid their employees
from surfing the Internet, thereby
hoping to increase productivity, are wrong.
Consoles play a big role in gaming today;
playing is no longer isolated, but increasingly
takes place in a social environment
as you play with others on a network,
recreating the social element of playing.
The growth of the travel and leisure market
is largely attributable to the increasing
number and wealth of retirees. Many companies
are increasingly focusing their
offerings on senior citizens. How do you
target this group?
Guerrino De Luca: We have a fundamental
mission to make technology simple.
I think this is the single most important
thing for senior citizens. Today’s teenagers
are used to a level of complexity that we
adults cannot even imagine. Even before
becoming old we struggle to grasp what
comes easily to kids. Today’s senior citizens
were not born with a PC, so we need to
make this technology very simple to use. I
have trained my parents to use video
communication on their PC, and I can tell
you my parents really don’t relate to PCs.
But the application is so compelling, the
opportunity to see me and their other children
so irresistible and so relatively easy
to use that they are interested.
The leisure and work activities of men and
women are becoming increasingly similar.
Are women using the computer more than
they did a few decades ago, and what is
the trend for the future?
Guerrino De Luca: I think that the big
unifying application is Internet communication.
Women tend to use the Internet for
communication, as they are more focused
on communication than men and every
application that enhances communication
attracts them. So we design our products
to appeal to that interest and the visual
sensitivity of the female consumer. We’ll
see growth even in areas like gaming that
are traditionally aimed at men. The more
gaming becomes social, the more women

GLOBAL INVESTOR FOCUS Leisure — 31
Do Asians play different computer games than the Europeans? Where are the big growth
opportunities in the PC game sector? Warren C. Jenson, Chief Financial and Administrative
Officer of Electronic Arts, provides the answers. Interview Ulrich Kaiser, Credit Suisse Research
“If you can include game
dynamics in education,
people will learn faster.”
Ulrich Kaiser: Total spending on
leisure activities is rising, and it’s an
important driver of global economic
growth in the 21st century. What are the
specific drivers behind growth in the
leisure market?
Warren C. Jenson: I cannot speak for
the whole leisure market, but I think
growth is based on two things: wealth and
changing demographics. To some extent,
in some countries, lifestyles are changing,
people are putting more value on leisure
time and their quality of life. As it relates
to interactive entertainment, technology
and quality are both getting better. Therefore
the quality of the entertainment
experience continues to improve and our
markets very naturally expand. The internet
is opening up all kinds of different
gaming experiences and draws more
and more people around the world to interactive
entertainment.
Demographically speaking, who is
Electronic Arts’ typical customer?
Warren C. Jenson: In interactive entertainment
the majority is male and the
average age is between 18 and 34 years.
What’s interesting though is that more
and more women are participating in interactive
entertainment. Separately, we are
finding that every year the average age actually
increases. This is probably due to
the fact that many people began playing
video games as teenagers or in their
an exciting form of entertainment as they
get older.
You mentioned female gamers. Are you
developing games that target this section
of the population?
Warren C. Jenson: We sure are working
at it. One of our best-selling franchises
is The Sims. In fact, this is the most successful
video game franchise ever created.
Today, this game has mostly female customers.
We also have a casual game website,
Pogo, where 60% plus of the players
are female. We’re working to create
more games and experiences that are likely
to attract female gamers.
Are there regional differences worldwide
in terms of gaming behavior
and preferences for different styles of
games?
Warren C. Jenson: I have to say two things
that are somewhat contradictory: in this
business one always has to remember that
all entertainment is local and games have
to be tailored to local tastes. If you fail
to do that, you won’t sell any copies or your
sales will be limited if it’s not culturally
relevant. Secondly, we’re fortunate to be
in a business where much of our entertainment
is global in its appeal. The Sims and
Need for Speed, for example, are two
of our biggest sellers. The Sims sell more
outside the US than inside. Need for
Speed is very successful in Europe, North
America and Asia.
What about Asia?
Warren C. Jenson: It’s all about online.
This is one of the principal differences;
someone playing a video game today in
Switzerland or in the United States would
go out and buy a PlayStation 3, an Xbox
360 or a Nintendo Wii and they would use
that as their gaming machine to play a
video game. Japan apart, the gaming consoles
have not really taken off in Asia.
In countries like Korea, China and Taiwan
gamers play online: they register, and the

GLOBAL INVESTOR FOCUS Leisure — 32

GLOBAL INVESTOR FOCUS Leisure — 33
Photo: Thomas Eugster
game is actually played on the game
company’s servers. Many of those games
are also very different in how the software
developer is compensated. Payment
is done through microtransactions where
people play the game for free but then
will buy different add-ons to their game and
download them into their gaming experience.
This market is also driven by advertising.
There are different models round
the world, the biggest difference between
Europe, North America and Asia being
the predominance of online gaming in the
Asian market. I expect that we will see
more online gaming in the next decade in
both North America and in Europe.
Are senior citizens also a target group for
Electronic Arts?
Warren C. Jenson: They are not today.
But I have to tip my hat to what Nintendo
has done: one of the games they have
for the Nintendo DS, their hand-held device,
is a game called Brain Age. The lore
of this game is that one of the senior
members of Nintendo’s board challenged
the Nintendo developers to come up
with something that he would like to play
which is all about mental stimulation and
exercising your brain.
People generally have more leisure time
and some of this additional time is
used for educational purposes. Are people
now demanding more educational games
combining fun and learning?
Warren C. Jenson: There always
has been an educational market. One of
the interesting things is that insights from
gaming used in teaching methodology actually
help people learn faster. Today
kids are growing up learning and playing
video games. The video game is a very
sophisticated piece of software where you
throughout the game. If you include game
dynamics in education, people will learn
faster.
Many video games are very timeconsuming.
Is there room for this in a
“The gaming
consoles have
not really taken
off in Asia –
but online has.”
world where free time is so scarce?
What trends do you see in this regard?
Warren C. Jenson: We try to provide
the best possible entertainment value.
There is an industry saying: for every
dollar we charge, you will on average have
an hour of entertainment. We try to do
our best to make sure that with every video
game there’s real entertainment value
and a very robust experience. Our games
allow gamers with 15 minutes to spare
to play for 15 minutes and to come back
and pick up the game where they left
off. We also have games on the mobile
phone if someone has a few minutes to
spare while on a bus. It also allows
someone who wishes to play for two
hours at a time to play for two hours at
a time, and again, everybody has a
great experience.
What are your current top sellers?
Warren C. Jenson: Some of our top
sellers around the world are: The Sims,
Need for Speed which is a street racing
game, FIFA, Madden NFL, Harry Potter.
What are the longer-term trends
between console, PC and hand-held
software games?
Warren C. Jenson: The longer-term
trend is connectivity, all the devices
you mentioned are increasingly going to
be connected. Your cell phone or a handheld
gaming device like the portable
PlayStation or the Nintendo DS and your
PC or console will all be connected.
On each of those you may have a different
entertainment experience but all of them
are very important to interactive entertainment
in the years to come.
What are the opportunities and risks
in the gaming industry in the longer term?
Warren C. Jenson: The principal risk
is the same risk every software developer
or developer of creative products has,
and that is to lose your creative energy.
Technology constantly improves and
this of course allows us to enhance the
entertainment experience. Still, there
is the risk that as an industry, we aren’t
taking advantage of what technology is
making possible, providing new and different
and also more interesting entertainment
experiences. Another opportunity I would
like to highlight is the trend toward online
gaming – every game developer has to be
very mindful of that when inventing
new experiences. It’s changing everything.
Do you see any opportunities for
ancillary products and services such as
in-game advertising, mobile gaming
and microtransactions?
Warren C. Jenson: Dynamic in-game
advertising is quickly becoming a reality.
Dynamic advertising is happening online
and it can change in an instant. If you’re an
advertiser you can put one advertisement
in today and tomorrow you can change it.
In the next generation of gaming consoles
this will become more and more prevalent.
With the Xbox 360, the PlayStation 3
and the Nintendo Wii you will see dynamic
in-game advertising continue to grow.
Microtransactions are already a reality.
A microtransaction is a download of additional
game content for a fee. If you
wish to buy a new car in a racing game,
or customize the clothing of your
character, or buy energy drinks for your
athlete, you can download these elements
into the game you’re playing. This is a
reality in many games today and it will be
an opportunity in most games as we

GLOBAL INVESTOR FOCUS Leisure — 34
from leisure
Lars Kalbreier, Head of Global Equities & Alternatives Research, Pascal Rohner, Equity Analyst
Leisure holds a central position in modern society. Throughout the
20th century, government social policies such as cuts in working
hours and the implementation of retirement schemes led to an increase
in leisure time. This trend is likely to continue, given the growing
importance being placed on individual well-being, and the changing
desires of baby boomers as they retire. As a result, in some
economies, some 20% of the workforce is now involved in goods
and services dedicated to the leisure time of others. On the other
hand, a widening imbalance still looms between the amount of
available free time and disposable income. Well-paid managers, for
example, often have little leisure time at their disposal and are
ready to pay a high price for personalized leisure. This concept is
likely to emerge as a global trend as a broader group of people will
seek more individual and a qualitatively better recreational time.
Individual well-being will gain in importance. The transition into a
feel-good society has altered this perception and also given rise to
the term “new luxury.” The motive for consumption is no longer social
differentiation, but rather individual well-being. New luxury goods
are less pricey than traditional luxury items, but are distinguished
from “budget” products through the perceived quality, lifestyle and
service enhancements they bring: iPods and Starbucks, as well as
fashionable sports apparel, are prime examples. The frontiers of
leisure are also extending to our shopping habits: shopping will increasingly
switch from being an everyday pain to a pleasure, helped
by the development of new shopping complexes incorporating cinemas,
restaurants and fitness centers. International real estate
companies with a focus on retail will reap rewards from this trend.
Furthermore, the desire for greater social well-being will increasingly
become a global trend. Consumption differences between the
West and Asia may consequently disappear – many young Asians
of the Internet generation (Generation Y) say they want to orientate
their lifestyles more toward leisure and consumption. The emergence
of new technologies that modify existing leisure goods will dramatically
alter the leisure market further. State-of-the-art video games
enabling you to speak to your counterpart and the ability to watch TV
via mobile phone or iPod are indications of the impact technology
will have on leisure. Manufacturers of screens and memory chips,
as well as content providers, will all profit from this trend. China’s
emergence in the world of multimedia, notably the opportunities
surrounding the 2008 Beijing Olympics, also offer good investment
opportunities.
In coming years, we also expect that nanotechnology will become
more and more important in leisure equipment: engineered sportswear,
fashion, entertainment systems and vehicles will increasingly
rely on innovations in this area.
Tourism will still remain big business in the leisure world of the
future. Tour operators will benefit from changing demographics, as
growing numbers of retirees learn to fill their “twilight leisure time”
creatively. Cruise line operators will be among the main benefactors.
Finally, for many people, dedication to appearance, health and
spirit during their free time will also become important. In the next
pages, readers will discover how leisure trends will evolve and how

GLOBAL INVESTOR FOCUS Leisure — 35
The shopping experience
Page 36
Mouthwatering new luxury goods
Page 43
Rediscovering television
Page 37
Nanotechnology: Boosting the value of leisure
Page 44/45
Investing in education
Page 38
Networked gaming
Page 46
Europeans and Americans love traveling
Page 39
Anti-aging: A new favorite pastime
Page 47
China’s new communication era
Page 40/41
Health and wellness enter the fast food sector
Page 42
Sports industry races ahead
Page 48
Illustration: Wolfgang Hametner

GLOBAL INVESTOR FOCUS Leisure — 36
Average daily
shopping
time in minutes
Share of leisure
time spent
on shopping
10% – 15%
Investments page 49
Illustration: Wolfgang Hametner
Men: 25–40
Women: 30–55
The shopping experience
Nowadays, shopping does not only serve to satisfy consumption
needs. It has also evolved into one of our most important leisure
activities. Recent surveys reveal that men spend on average between
25 and 40 minutes shopping every day, while women spend
even more, up to 55 minutes. Factoring out sleeping and working
time, we therefore apportion 10%–15% of the total time budget at
our disposal to shopping.
As consumers are increasingly pressed for time, many do not
want to waste that precious commodity searching far and wide to
meet their requirements, preferring to find as much as possible
under one roof. Hence, modern, spacious shopping centers fulfill
the present-day needs of consumers offering a vast array of diverse
products, services and activities. In this regard, shopping malls are
striving to create a memorable experience for consumers and aiming
to tempt them to return again and again. Successful shopping centers
lure consumers with a variety of incentives: besides traditional
food and fashion shops, offerings range from gourmet restaurants
to takeaways, from massage therapy sessions to health care centers.
Cinemas and entertainment venues such as discos, bowling alleys
and fitness centers may also form part of a successful tenant mix.
The objective here is to entice consumers to return to the shopping
center throughout the day – at lunchtime or during coffee breaks in
the restaurants, in the evening to the cinema, disco or fitness studio.
Location and proximity to transportation infrastructure are also important
factors in establishing a successful shopping mall. The power
to lure consumers to a shopping center is closely linked to the
ability to achieve the right tenant structure, and these factors, in
turn, are vital to the economic success of a shopping center. Operators
can ask higher rents in places that register a strong flow of
customers and they also reap benefits directly from customer flows
through sales-linked clauses in rental contracts.
Larger shopping centers that offer entertainment activities and
events have created success stories worldwide. Such facilities can
be found in Manhattan, Sydney, Paris, Brazil and even Asia. In
Eastern Europe, where such malls were scarce until recently, shopping
centers are currently enjoying a boom. In the Bulgarian capital,
for example, the first modern shopping center (Mall of Sofia) opened
its doors in 2005, featuring, among other things, a 12-screen multiplex
cinema. Eric Güller, Zoltan Szelyes

GLOBAL INVESTOR FOCUS Leisure — 37
Expected number of sellable units
PDP (Plasma) TFT-LCD
Investments page 49
Illustration: Wolfgang Hametner; Source: iSupply, DisplaySearch, CS
2006: 8.5/40 million
2007: 10.5/58 million
2008: 13/78 million
2009: 16/92 million
Rediscovering television
The ways in which we watch television — how, where, when and
what — will change radically in the future, giving people greater
choice over how they interact with this ubiquitous leisure tool. Consumers
will no longer need to decide between television and other
leisure activities, increasingly combining them to make more efficient
use of their limited free time. Until recently, TV viewers were,
for the most part, confined to their living rooms. But improving
consumer electronic technology, more efficient infrastructure and
the fast-expanding world of digital media are all helping consumers
to watch television wherever and whenever they desire. In the era
of laptops, mobile phones and iPods, consumers have virtually unlimited
access to television programs and podcasts. Moreover, the
increased storage capacity of consumer electronic equipment confers
on viewers liberty to watch TV when they want.
So perhaps you want to catch a vital football game on TV, but
the weather is great and you would also like to go swimming with
friends. Thanks to mobile electronics equipment, such as laptops
and mobile handsets, there is no longer a choice to make here,
since you can enjoy both activities. A laptop equipped with a DVB
digital TV card provides reception of terrestrially transmitted
television, while a TV-equipped mobile handset offers an alternative
means of viewing — and may be able to display individual
video clips, such as the replay of a goal. Personal video recorders
(PVRs) constitute a third option, allowing time-delayed television
viewing.
Viewers are increasingly able to have a greater say in what they
watch too, compiling their favorite programs themselves using “video
on demand” (VoD) technology. Selecting a VoD provider will become
easier, as consumers gain from stepped-up competition between
cable operators and telecoms companies. Both groups are offering
customers the so-called triple play of television, Internet and telephone
in one package, their products differentiated by quality, price
and/or content. The content providers are also likely to benefit from
this. The triple play will lead to a fusion of the television with the PC,
as laptops become more suitable for the living room and serve as
the hub for all forms of digital media: television, photos, video, music
archives and so on. This will, in turn, facilitate private and commercial
exchange in these media and enhance opportunities for social
networking through technology. The TV experience will stop being a
one-way flow from screen to the passive viewer. Exchanging recipes,
developing hobbies to the full and offering advice on every aspect
of life are things that will no longer be conceivable without using
the new generation of TV/PC media. Ulrich Kaiser

GLOBAL INVESTOR FOCUS Leisure — 38
Growth in enrollment
in post-secondary
educational
institutions in the past
10 years
China is the
world’s largest
market for
education
USD 72 bn
Investments page 49
Illustration: Wolfgang Hametner
Countries with middle
incomes: 77%
Wealthier countries: 43%
Investing in education
We expect private education services to grow rapidly on the back
of the need for advanced and professional learning, led by rising
demand in emerging markets and the changing requirements being
made of personnel in Western countries. The public sector has
been slow to react to these changes, and is unlikely to meet the
new expectations of the industry, creating an opportunity for the
private sector to grow.
We identify three catalysts likely to stimulate increased demand
for educational services in coming years: 1. Emerging markets’ demand
is rising: the wealth effect of recent years in flourishing
economies has seen the growth of a middle class keen on education
for their children. For example, in China alone, the number of
post-graduate students has risen by 77% in the past decade, compared
with 43% in Western countries. We expect this trend to continue
as sustained, private sector-led, economic growth boosts the
development of the middle class in many emerging markets. 2.
Continuous education is becoming a crucial factor for success: in
today’s fast-changing business environment, new techniques, new
tools, and new knowledge are key to remaining competitive. Therefore,
employees increasingly need to take courses whilst in employment
in order to keep up with changes. 3. An increasing
number of retired people in Western countries intend to use their
leisure time more actively: there is a clear trend in which older people
are starting to spend more time on mature learning. We believe
that the education market will increasingly focus on this new target
group.
Flexible courses offered parallel to the job, personalized services
and seminars on brand-new techniques are the most-often
requested services. The public sector is unlikely to live up to the
challenges posed by this increase in demand for education. The
public sector requires administrative approval for changes. It is also
limited by the legacy of the past (such as the lack of courses provided
in English in many countries) and is mostly geared to mass
education, not to working adults with specific requirements, particularly
in fast-growing economies.
As a result, the private sector is increasingly seen as an attractive
niche market capable of providing the self-improvement services
needed by people living in emerging markets and for working
adults. To illustrate this trend, an increasing share of multinational
firms are signing outsourcing contracts with private education firms
to offer regular training to their employees. Eritra Ibroci

GLOBAL INVESTOR FOCUS Leisure — 39
Expected
annual growth
in cabin capacity
of cruise ships
between
2004 and 2009
In North America
+8%
In Asia
+2%
In Europe
+6%
Investments page 49
Illustration: Wolfgang Hametner
Europeans and Americans love traveling
Shortly after the “Queen Mary 2” became the world’s largest cruise
ship, the “Freedom of The Seas” surpassed it. Making its maiden
voyage in April 2006, this floating hotel – 339 meters long and
56 meters wide – can carry up to 3,800 passengers, offering them
a dazzling range of activities and entertainment. The cruise ship industry
is booming. Current shipbuilding capacity will be fully utilized
for years to come because demand for cargo ships is also very
high. We estimate cabin capacity will increase at an annual rate of
8% in North America between 2004 and 2009, by 6% in Europe
and 2% in Asia. This growth differential mainly reflects the greater
wealth of the baby boomer generation in the West, which is becoming
the major target group for the cruise ship industry. We expect
some scaling effects as rising supply meets what we believe will be
even stronger rising demand.
Cruise ships are now being built with specific age groups in
mind. Active seniors from Europe and North America appreciate
what floating hotels calling at a different port every day can offer.
So the rising number of retirees with money to spend represents a
growing pool of potential customers. In our view, this segment is
not only growing in number but also in quality, with the new ships
being built for it mainly offering four- and five-star facilities. Another
target group that cruise ship companies are rediscovering are
the growing ranks of young singles with adequate incomes. Party
ships like those operated by AIDA, which belongs to the Carnival
Group, are becoming increasingly popular. The key point for this
target group is a mixture of socializing and adventure. This segment
is likely to grow in numbers but less so in terms of extra content,
since all-inclusive packages are very popular.
To meet customer needs, more niche offerings are being marketed,
such as cruises with land-tour packages – these are mainly
to northern destinations such as Alaska and Canada, but also to
new markets, like Eastern Europe, as they open up. This segment
offers good growth potential with rising margins as demand for
additional services, such as excursions and day tours, picks up.
Another new field is low-cost cruising of the type offered by easy-
Cruise, an initiative of Stelios Haji-Ioannou, the founder of easyJet.
Since low-cost cruise shipping is a very new category, direct investment
patterns are yet to be established. However, a similar situation
can be witnessed in the airline industry, where national carriers
managed to close the gap with low-cost rivals on some fronts while
also expanding their luxury product to earn better rents. The all-new
A380 aircraft, when it is finally delivered, will offer a new luxury
class segment, generating better margins. The travel industry seems
set to expand in the low-cost and luxury segments, while that aimed
at the middle classes could fade. Markus Mächler, David Williamson

GLOBAL INVESTOR FOCUS Leisure — 40
Mobile TV subscribers
IPTV customers
Investments page 50
2006: 1 million
2009: 94 million
2006: 0.816 million
2010: 18.2 million
Number of subscribers
in broadband sector
2006: 48.5 million
2010: 139 million
Illustration: Wolfgang Hametner

GLOBAL INVESTOR FOCUS Leisure — 41
China’s new communication era
For the 449 million mobile service subscribers in China, the world’s
largest wireless market, watching TV on mobile handsets is no longer
just a dream. Although still in their infancy, mobile TV services
in China are expected to take flight, with the Beijing Olympics in
2008 providing the biggest catalyst driving mobile TV subscriber
growth. The Chinese government is pushing for widespread availability
by the time of the Olympics and, according to the latest market
research, there is strong potential demand for mobile TV services.
So there is every possibility that a mass market will emerge in the
next three years. To pave the way for broadcasts during the Olympics,
China will begin testing its digital multimedia broadcasting
(DMB) technology in mid-2007. Research group In-Stat forecasts
the number of mobile TV subscribers in China will grow to 94 million
by 2009 from around one million in June 2006. Government studies
estimate that 8% of China’s mobile phone users will subscribe to
mobile TV services within five years.
As China enters the new mobile era, with 3G licensing expected
in Q1 2007, consumers will experience attractive offerings like sports
news, TV drama, music videos and weather forecasts on their mobile
phones – brief broadcasts lasting less than 15 minutes and so
perfect for killing time while commuting or taking a lunch break.
According to the Xinhua news agency, China’s mobile TV market is
projected to grow to CNY 6.05 billion (around USD 770 million) in
2008. In addition to mobile phones, personal digital assistants (PDA)
and MP4 players will also be able to receive a mobile TV signal in
China by 2008.
High-speed Internet for the entire city of Beijing
Shanghai Dragon Mobile Information Ltd, a subsidiary of Shanghai
Media Group (SMG), signed a strategic licensing agreement with
ROK, the UK-based mobile technology and entertainment developer,
in May 2006 to develop mass-market 2.5G mobile TV technology
in China. SMG is the only approved content-supplier for China
Mobile, the world’s largest mobile network operator. The agreement
allows SMG to deploy multichannel mobile TV services to
2.5G handsets across China via GPRS and will include international
and Chinese-language channels. Along with mobile phones, TV will
be the most popular electronic medium for Chinese consumers in
the 21st century. With 128 million cable-TV-service subscribers and
380 million TV households, China is the world’s largest TV market
and is well poised to become the world’s largest market for Internet
Protocol Television (IPTV) before the end of this decade. The Chinese
government has placed a strong emphasis on bringing the
cable, broadcasting and telecoms industries together to deliver the
best services for the Beijing Olympics.
Everyone wants IPTV
The government intends every household in Beijing to have access
to high-speed Internet by 2008 as part of this development. Over
the past three years, China’s broadband sector has shown a compound
annual growth rate of 79%. With 36.9 million subscribers in
2005, it was already the second largest broadband market in the
world, behind the US. The Chinese broadband market has sustained
strong growth since then to reach 48.5 million subscribers in September
2006.
With a broadband penetration rate of only 3.7%, there is enormous
upside potential for China’s broadband market in the long run.
IT and telecoms consultancy Ovum forecasts there will be 79 million
broadband households by end-2007, turning China into the world’s
largest broadband country. The sector is then projected to grow a
further 76% to 139 million subscribers by 2010.
At present, IPTV services have a restricted reach. There is potential
to expand but for now they are limited to trials by key operators,
including SMG and China Central Television (CCTV), the two earliest
holders of IPTV licenses in China. Two more IPTV licenses were
recently granted to Southern Broadcasting and Media Group and
China International Broadcasting Station. It is estimated that there
are 816,000 IPTV customers in China today. In-Stat projects that
China will have as many as 18.2 million IPTV subscribers by 2010
and that IPTV set-top box shipments will jump from 100,000 units
in 2005 to 8.7 million units by 2010.
Chinese telecoms operators are increasingly keen to introduce
IPTV services, given stiffening competition in their traditional fixedline
businesses and improving technologies. They are in a good
position to succeed, given the significant DSL subscriber base in
China, which provides a ready pool of potential IPTV subscribers in
the run-up to the Beijing Olympics. Fan Cheuk Wan

GLOBAL INVESTOR FOCUS Leisure — 42
Sales growth of probiotic milk-based
drinks in 2005
+17%
Investments page 50
Illustration: Wolfgang Hametner; Source: AC Nielsen
Health and well-being enter the fast food sector
The political will to tackle the health risks of obesity is gathering
momentum across the developed world, as New York’s recent decision
to ban food containing artificial trans fats from all 24,000
restaurants in the city illustrates. The cost of treating associated
diseases, linked to elevated cholesterol levels and cardiovascular
disorders, is placing such a burden on stretched health systems
that remedial action is now widely seen as highly desirable. It is
little surprise then that this increasing focus on health and well-being
is also a dominant trend in the consumer foods industry itself.
We believe this trend will accelerate over the next couple of years,
as consumers become ever more health-conscious.
Over the last few decades, the increasing participation of women
in the labor force, the more intense usage of time and the resulting
shift in eating habits towards fast food and out-of-home consumption
have fostered the growth of easy-to-consume products. Today,
the demand for convenience products is overwhelming. As health
awareness among consumers extends to the fast food sector, the
industry has been reducing trans fats in their products. Mineral
water, tea and fruit juice consumption is outpacing that of carbonated
soft drinks; while the market in drinkable dairy products with
active benefits is faster growing than that for confectionery. As
consumers seem increasingly willing to pay a premium for products
perceived as healthy and which are branded, this is offering a high-
growth and margin expansion opportunity for the industry, driven
by premium pricing and increasing the price per volume unit. We
believe that the division within the food manufacturing sector between
those companies that adjust their product portfolio to match
these trends and those sticking with lower-performing, old-style
business will become accentuated. Regulations, currently being
proposed for the European Union, are likely to put further pressure
on the viability of high-fat/high-sugar products. The companies
that invest in research & development to improve their food technology
for the benefit of the mass market are likely to be those that
prosper.
We believe it will be critical for the food manufacturing industry
to shift its product portfolio out of slow-growing categories such as
frozen food and traditional confectionery into nutrition-oriented
products, healthier ready meals and snacks and water, as well as
improving the nutritional profile of their existing product portfolio.
Since consumers do not seem willing to completely exclude chocolate,
snacks and cookies from their diet, we believe that another
challenge will not only be to improve knowledge of potential health
risks in those food categories, but also to genuinely improve their
nutritional profile. Olivier P. Müller

GLOBAL INVESTOR FOCUS Leisure — 43
Worldwide spending
on traditional
and new luxury
goods in USD
Luxury goods: USD 1 trillion
Swiss GDP: 366 billion
Expected
long-term annual
growth in luxury
goods sales
+10%
Investments page 50
Illustration: Wolfgang Hametner
Mouthwatering new luxury goods
Consumers worldwide spend approximately USD one trillion every
year on traditional and new luxury goods — the equivalent of the
entire GDP of Spain or three times that of Switzerland. It is a sum
that many believe will continue to grow at a rapid pace in coming
years. However, the consumer’s perception of luxury is no longer
just about “traditional” luxury brands, such as Louis Vuitton, associated
with the core attributes of creativity, craftsmanship, exclusivity,
innovation and premium pricing. Now there is also “affordable”
luxury, which is about goods within a product category selling
at a significant premium to the average, offering not only better
quality and availability than peers but also binding consumers emotionally.
Consider, for example, Starbucks and Lindt & Sprüngli.
While the former, an emblematic new luxury brand, charges a premium
of around 50% over similar coffee products for a pleasurable
experience, the latter has managed to garner a significant share of
the premium chocolate market worldwide. Both traditional and affordable
luxury are exposed, to a greater or lesser extent, to powerful
economic, demographic and cultural trends. The wealth effect
in emerging markets should support consumption and travel, while,
in the West, luxury goods demand should continue to benefit from
rising income inequality and discretionary income, as technological
innovation, global sourcing and retail polarization continue to drive
down costs. Other powerful engines for growth in the luxury goods
market are migration to the cities in China, as well as an increasing
pool of aging baby boomers in mature markets with a propensity to
spend more on higher-priced items. Cultural shifts, the increased
spending power of women and customer sophistication should also
help global luxury goods turnover grow at more than 10% per year in
the longer term.
The trend toward premium goods or affordable luxury is more of
a mature markets phenomenon. In his book “Trading Up: The New
American Luxury,” Michael Silverstein distinguishes more than 30
categories; from travel to food and personal care, where consumers
trade up to premium products and services that are positioned below
traditional luxury goods. Pressured by time, stressed by work, living
in a complex world, sophisticated Western consumers are willing to
pay more not only for quality and performance, but also for comforting
emotional benefits. Changes in retail structures, greater
availability of capital and efficient global supply-chain management
systems have enabled established companies and new entrants to
take advantage of this trend. Firms in the affordable luxury segment,
which can create, manufacture and deliver superior products, normally
generate superior growth and higher returns and offer attractive
long-term investment opportunities. Robin Seydoux

GLOBAL INVESTOR FOCUS Leisure — 44
Size of the market for textiles that use nanotechnology
Investments page 50
2007: USD 13.6 billion
2012: USD 115 billion
Illustration: Wolfgang Hametner

GLOBAL INVESTOR FOCUS Leisure — 45
Nanotechnology: Boosting the value of leisure
Traveling up into the earth’s atmosphere by elevator; swimming in
cold water like a polar bear without freezing; playing sports without
having to wash your sweaty clothes afterward; using mobile handsets
and PCs mounted on your body like a second skin; performing
daily check-ups on your health without going to the doctor; accessing
electricity from anywhere without an electrical outlet; flying
away on vacation without contributing to the expanding hole in
the ozone layer – are these all impossible aspirations? The proponents
of nanotechnology say this nascent scientific field could help
realize such leisure-time dreams in the near future.
Nanotechnology reaches for the stars
The incentive to satisfy such needs is often mankind’s burning desire
to shape life in a more secure, pleasant and interesting fashion.
Technological advances have always played an important role in enhancing
the quality of life and, thus, leisure time as well. In the last
100 years, mankind has accomplished amazing feats through technological
progress, thereby raising the level of prosperity and
boosting leisure value. The automobile, radio, television, washing
machine, airplane, telephone and light bulb are all products that
have enhanced the qualitative and quantitative aspects of our leisure
time. They have improved communications, reduced the amount of
time expended on housework, or expanded mobility through longdistance
travel.
In the past 30 years, findings from the space programs pursued
by the US and Russia provided the foundations for a new stage of
technological advancement. A vast array of modern, mass-produced
products — such as color television, video and DVD recorders,
laptop computers, mobile phone or the Internet — have completely
changed our leisure-time activities, especially in the fields of communication,
information technology and media consumption.
With the digital revolution well under way, nanotechnology is
now the bearer of hope for a new age of technological progress,
which could herald the era of an environmentally friendly society of
greater leisure and well-being. In the search for new realms of experience
with nanotechnology, we quickly encounter a somewhat
amusing Utopian world. For instance, the tensile strength and fracture
resistance of mesh-like interlocking carbon nanotubes, spun
into circular nanotube-composite cable, could enable the construction
of an “elevator to the stars.” A thin, wide “nanocable” would
connect from a point on the equator to an orbiting space station,
braced by the earth’s gravitational pull. Heavy payloads could then
be transported along this nanocable from the earth’s surface up to
the space station. While the idea of a “space elevator” being built
seems rather distant (though NASA is seriously studying this project),
the influence of nanotechnology in the leisure industry is already
growing in fields such as sportswear, fashion, entertainment
and information electronics as well as energy-efficient transport.
From germ killer to energy source
The market for textiles that use nanotechnology applications is already
valued at USD 13.6 billion and should grow to more than USD
115 billion by the year 2012, according to nanotech research firm
Cientifica. High expectations have been set, particularly for the sport
and leisure textiles subsector. For example, new optical fibers can
be utilized that permit iridescently changing color effects, while light,
easy-to-wear electronic communication or information components,
such as pliable flat-screen displays, can also be incorporated into
textiles. Another interesting development made possible through
nanotechnology applications is the use of biosensors in textiles,
which monitor the state of health of the wearer. Strong demand for
such a function could come from people in need of care, in particular.
Furthermore, in the foreseeable future, ultra-thin nano solar-cell
films or state-of-the-art nanobatteries will likely be used in textiles
as energy sources for the aforementioned functions. Last but not
least, stain- and odor-repellent nanomaterials should help reduce
the amount of time expended on washing clothes. Nanotech products
will likely find their way increasingly into households: especially
materials that help keep households clean, such as stain- and odorrepellent
sealants for toilets, or those for windows, letting raindrops
drip off without leaving behind dirty streaks. These are all attributes
of products that will boost our leisure value and enhance our sense
of well-being. Uwe Neumann

GLOBAL INVESTOR FOCUS Leisure — 46
Expenditures on
television
advertising in the
USA
USD 50 bn
Expenditures on
in-game advertising
(IGA) and
microtransactions
in the USA
USD 0.1–1 bn
each
Expected
growth rate of
video game
market in 2006
+10%
in 2007
>+20%
Investments page 51
Illustration: Wolfgang Hametner
Networked gaming
“Hai itz m3. c2c” “bz. way” “bawt a nu mmorpg 4my mactel, wpg l8tr
:))” “nk. wich 1” “WoW, im a newb” “np m32” “lol”“wen”“tomm?”
“wad ^5” “tc”
“Hi, it’s me, care to chat?” “Busy. What about you?” “Bought a
new Massively Multiplayer Online Role-Playing Game for my Mac-
Tel. Want to play a game later? (big smile)” “No kidding. Which
one?” “World of Warcraft, I am a newbie.” “No problem, me too.”
“Laugh out loud.” “When?” “Tomorrow?” “Without a doubt (high
five).” “Take care.”
Thousands of online video game plays have begun with a similar
conversation – using the increasingly common digital language of
Generation Y. Broadly, Gen Y-ers were born in the 1980s or ’90s
and use the Internet as an integral part of their daily lives. The group
is as large as the baby boomer generation. Gen Y is rapidly gaining
economic power. While Boomers know a world of telephone socialization,
newspaper reading, and television watching, the Gen Y
spends its time with video games, digital social networking platforms
such as MySpace, and real-time Internet news sites. Boomers
get their entertainment and news through passive listening/
watching, but Gen Y, in contrast, nearly controls its media environment.
The trend strongly favors the video game industry, in our
view; overlapping with a strong new console cycle. We expect the
video game market to have expanded roughly 10% in 2006, and to
accelerate at over double that rate in 2007. The new console cycle
marks a massive online migration for the industry that opens up
potentially vast new revenue streams to gaming companies. The
pay-to-play subscription model and wireless gaming are just two of
these. As gaming moves into Gen Y’s digital living room, it threatens
to divert eyeballs away from the television, where advertisers,
in the US alone, will spend roughly USD 50 billion this year. In-game
advertising is a novice industry with vast potential, in our view.
Such ads could also subsidize game development costs, facilitating
lower selling prices, and bringing gaming to a wider audience over
the next five years. Microtransactions provide another opportunity,
involving very small fees to buy high volumes of things such as ingame
equipment, characters and theme music. Our industry sales
forecast does not include any of these new streams. We believe
each could generate USD 500 million to 1 billion over the next fiveyear
cycle. Steven Soranno

GLOBAL INVESTOR FOCUS Leisure — 47
Increase in overall
number of instances
of cosmetic surgery
in the past five years
Growth of
noninvasive
cosmetic surgical
procedures
Investments page 51
Illustration: Wolfgang Hametner
2001: 5.7 million
2006: 11.4 million
2001: 4.3 million
2006: 9.3 million
Anti-aging: A new favorite pastime
In the US, the aging baby boomer generation is set to trigger growing
demand for anti-aging products. Today, the baby boomer demographic
segment represents 25% of the US population and controls
approximately 50% of all discretionary income in the country.
The wealth and size of this group, combined with its desire to remain
youthful-looking, are key drivers that will boost demand for aesthetic
procedures in the near term.
The American Society for Aesthetic Plastic Surgery reports that,
in 2005, total expenditure on aesthetic procedures in the US was
approximately USD 12.4 billion. In the last five years, the total
number of aesthetic procedures increased from approximately 5.7
million to over 11.4 million, representing a 15% compounded annual
growth rate. This growth is primarily due to an increase in noninvasive
aesthetic procedures, which rose from 4.3 million to approximately
9.3 million. Patients, both female and male, are seeking
treatment for wrinkles in larger numbers than ever before. The baby
boomers are active; they do not like spending time in recovery away
from work and family activities, and are constantly looking for noninvasive
or minimally invasive alternatives to plastic surgery. A
number of speciality pharmaceutical and medical device companies
in the US are taking advantage of this new trend by developing
products addressing the needs of the baby boomers, while helping
them maintain their active lifestyles. As a result, we expect to see
more companies developing minimally invasive, long-lasting facial
dermal fillers and noninvasive, skin-tightening, energy-based treatments.
Dermal fillers are natural or synthetic substances that are
injected below the skin to fill lines and correct wrinkles, helping to
add volume to facial areas for a more youthful look. The new dermal
fillers, expected to enter the US market in the next couple of
years, last longer and contain larger hyaluronic acid gel particles
that treat deeper wrinkles, which makes them suitable not only for
women, but also for men. The noninvasive skin-tightening treatments
of the future include devices that use radiofrequency energy
to penetrate the skin deeper than a regular laser. The energy used
heats and shrinks collagen, tightens the dermis and the tissue underneath
it while simultaneously cooling and protecting the surface
of the skin. The heating of the collagen initiates a healing process,
which further tightens the skin and reduces wrinkles over a period
of time. The procedure requires no recovery time. Tania Dimitrova

GLOBAL INVESTOR FOCUS Leisure — 48
Growth in sales in the
sportswear
sector in the last two
years
+7%
Worldwide sales
in the sporting
goods industry in
2006
USD 73.8 bn
Investments page 51
Illustration: Wolfgang Hametner
Sports industry races ahead
Over the past decade, the trend towards healthier lifestyles has
gained momentum, boosting health and fitness club memberships
substantially. In Germany and Switzerland, for example, memberships
have almost tripled since 1992. 1 At present, almost 10% of the
German population belongs to a fitness club. In Switzerland, spending
on sports has risen to CHF 1,400 per capita annually, the largest
share of which (30%) goes on apparel and shoes. 2
As people around the world strive to achieve a better balance
between work and leisure activity, the appetite for sports has
grown, particularly among the active population with an above-average
income. Consequently, apparel and footwear demand is climbing
at a healthy pace. In the past two years, worldwide sales of
sports apparel and footwear expanded roughly 7% per annum to
total USD 73.8 billion. Demand is strongest for technically advanced
gear and trendy items, particularly in the footwear segment, as
people seek not only to improve their sporting prowess and reduce
the risk of sporting accidents, but also to show off their leisure
apparel in everyday life. Leaders in the sports industry have been
able to reap the fruits of this use of sporting gear in wider society
through their investments in research and development, design and
retail outlets. Global footwear market share is currently dominated
by three companies: Nike (36.6%), Adidas (22.2%) and Puma
(6.9%), while the sports apparel market is much more fragmented,
with Adidas and Nike taking the top two slots at shares of 9.1% and
8.5%, respectively. Merger and acquisition activity is expected to
rise, particularly in the apparel area, with the leading manufacturers
likely to seek out niche players in certain sports equipment
while capitalizing on their marketing power. We can, therefore, expect
the leaders to become even more powerful in the coming
years. David Williamson, Markus Mächler
1
Karsten Hollasch and Fabio Mathias, Deloitte & Touche, “Health club management”. 2 Markus Lamprecht and Hanspeter Stamm, Sport Schweiz 2000.

GLOBAL INVESTOR FOCUS Leisure — 49
Investments
The shopping experience
Rediscovering television
Internationally active property companies with a retail focus not only
reap rewards from their close ties to globally expanding retailers,
such as H&M, Zara, Bulgari, Tesco, Carrefour and Wal-Mart, but
also boast a high level of competence in shopping center management,
a sense of local norms and innovative flair. In this regard,
Westfield Group (HOLD), with strong businesses in Australia, the
US and the UK, is the most innovative and successful globally active
company. The US-based market leader Simon Property (HOLD)
and European-based Dominator Rodamco (HOLD) should also
benefit disproportionately in the long term from their market knowhow
and network of ties. For investors who wish to profit from
growing earnings and expanding retail floor space in emerging
markets, Meinl European Land (BUY) in Eastern Europe and Suntech
REIT (HOLD) in Asia represent interesting real estate investments.
Eric Güller, Zoltan Szelyes
Opportunities are rife for the companies best positioned to supply
the revived global television market. On the hardware side, Samsung
Electronics (BUY) stands out for three reasons. First, the
South Korea-based electronics giant is the world’s largest manufacturer
of LCD flat-panel displays and, as such, the most important
supplier for PC and TV equipment companies, including Sony.
Second, the group dominates the memory chip market in the field
of NAND Flash as well as the DRAM segment. NAND Flash is required
for storing data, including music and photos, on MP3 players
and mobile phones, while DRAM serves primarily as storage capacity
for PCs and game consoles. Third, Samsung Electronics holds
the number three ranking in mobile handset production worldwide.
MEI (HOLD) is the world’s leading manufacturer of plasma screen
TVs and Sharp (BUY) of displays for mobile electronic devices. By
contrast, the content side is heavily dominated by US firms, among
which we regard News Corp (BUY) and Walt Disney (BUY) as interesting
investment opportunities. Ulrich Kaiser
Investing in education
Europeans and Americans love traveling
It is not easy to find “pure plays” in the private education sector,
which benefit from both the growing demand from emerging markets
and the growing needs of a competitive repositioning of developed
countries. For example, China’s rapid growth in recent years has
created a big demand for certified professionals by Chinese and
multinational companies, as well as government agencies. This has
led to a corresponding increase in demand for high-quality professional
certification preparation courses and materials. Companies
like Pearson (HOLD) and Bright Horizons (BUY) could benefit in the
long term from the growing trend to provide part-time education
and personalized services to customers. Eritra Ibroci
As the world’s largest cruise operator, Carnival (BUY) should benefit
from the upsurge in demand for leisure activities. We expect some
stabilization in 2007 Caribbean bookings and pricing. The recent
decline in bunker fuel costs coupled with a slightly expanding margin
structure should translate into mid-teen annual earnings-per-share
growth. Carnival offers investors meaningful upside potential over
the intermediate and long term. TUI (HOLD), one of the largest holiday
operators in Europe, operates four top-class leisure ships, including
the “MS Europa,” along with 133 container ships. The positive
impact from cruise activities has been overshadowed by integration
problems at CP ships, the container shipping operation TUI acquired
in 2005. However, these issues should be sorted out in the medium
term, so we expect investor interest to increase again. Tallink (HOLD)
operates ferry services in the Baltic region and is expanding into the
leisure business. We see this recommendation not without risk but
with good upside potential. Markus Mächler, David Williamson
All ratings are based on a six to twelve month investment view

GLOBAL INVESTOR FOCUS Leisure — 50
China’s new communication era
Health and well-being enter fast food sector
Chinese telecoms operators have developed a clear business model
for streaming mobile video services over 2.5G and 3G networks.
China Mobile (SELL) has signed agreements with phone-makers to
buy TV-enabled handsets for a mass-market rollout of mobile TV
services. China Telecom (HOLD) and China Netcom (BUY), as the
dominant providers of broadband access services in China with a
combined market share of 87%, should benefit from the rapid
deployment of IPTV services in the run-up to the Beijing Olympics.
Leading 3G equipment suppliers include Datang Mobile, Alcatel
Shanghai Bell and Siemens (BUY). All these equipment providers
are currently working with the Chinese telecoms operators on improving
the interconnection between 2G and 3G networks. Being
the sole designer of one of the TD-SCDMA trial systems, China
Communications Services (HOLD) should directly benefit from national
3G deployment in 2007. On the TV broadcasting front, we
believe pioneers in the development of TV-enabled handsets, including
Nokia (HOLD) and NEC (HOLD), will benefit from China’s
commercial roll-out of mobile TV ahead of the Beijing Olympics.
Other top-tier IPTV players in China include Huawei, Siemens and
Alcatel-Lucent (BUY). Fan Cheuk Wan
We believe that those companies which have started investing a lot
of R&D into and moved their product portfolio towards higher valueadded
products are now best positioned. In Europe, Nestlé (BUY)
and Danone (BUY) are our favorite stocks. They have been successfully
focusing on “health & well-being” in recent years, particularly
with regard to nutrition products and also water. We believe
that Nestlé will continue to transform its portfolio out of commodity-type
products into high-margin, high-growth nutrition products,
partially by acquisitions. Danone, with its fresh dairy products, beverages
and biscuits has an excellent stake in the fastest-growing
and most profitable categories. In the United States, by contrast,
the tone has been more on improving the nutritional profile of categories
that used to be considered unhealthy. We highlight PepsiCo
(BUY), which improved its snacks portfolio towards “better-for-you”
products and now has one of the best offerings of healthy food
snacks. Kraft (HOLD) differs from other US names, as it has a
strong focus on introducing health and well-being into all its product
categories. McDonald’s (BUY), the world’s largest fast food
restaurant chain, has been a prime mover in the sector, introducing
a number of product innovations, including a variety of salads and
reducing trans fats. Olivier P. Müller, David Williamson
Mouthwatering luxury goods
Nanotechnology: Boosting the value of leisure
Lindt & Sprüngli (BUY) has successfully positioned itself in the premium
chocolate segment through a high degree of innovation and
continuous investment in its brand. The company now benefits
from strong demand for high-quality chocolate and trading up by
customers to Lindt & Sprüngli’s “new luxury” products. Because of
its excellent business model and the company’s entry into fastgrowing
new markets, we believe Lindt & Sprüngli is an attractive
long-term investment vehicle. Starbucks (HOLD) has captured the
attention of both consumers and investors with its rapid growth
over the past decade, and the brand has achieved near-iconic status
around the globe. Significant growth prospects remain in both the
US and overseas. Starbucks is also becoming more than just coffee;
it is evolving into a leisure/lifestyle experience for consumers
through its own-label merchandise and product tie-ins to other
brands. Expectations for growth remain very high. Robin Seydoux
Japanese companies are the leaders in the use of nanomaterials
and nanoapplications within the textile industry. One such example
is the firm Teijin (HOLD), which has developed the only color-optic
textile fiber (Morphotex) that emulates the natural iridescent colors
emitted by the South American Morpho butterfly, changing color
depending on the incidence of light and shimmering like a rainbow.
The search for companies that are pure manufacturers of nanomaterials
and nanoapplications does not take very long. However, most of
these firms are still small start-up companies, such as the innovative
battery manufacturer Altair Nanotechnologies (BUY) which only has
a modest market capitalization and still carries high investment risks.
On the other hand, there are also companies like Nanotex, or Nano-
Opto, although these are still privately held enterprises. Investors
can participate indirectly in the success of these firms through investing
in the holding company Harris & Harris Group (BUY), which
holds stakes in private firms in the nanotech sector and provides
financial support. Another interesting company is Cambridge Display
Technology (BUY), whose organic-light-emitting diodes (OLEDs)
technology has opened the door to the development of smaller,
more pliable display screens featuring greater contrast and higher
resolution. Uwe Neumann

GLOBAL INVESTOR FOCUS Leisure — 51
Networked gaming
Beauty care: A new favorite pastime
We believe the industry offers attractive longer-term and tradingoriented
opportunities. Video game sales are strongest during the
back-to-school and holiday gift-giving seasons, a pattern reflected
in solid near-term share price correlations. Electronic Arts (BUY) is
our top industry selection. While rising game development costs are
one of the industry’s key challenges, EA has built a strong design
team and has already funded much of the start-up structure for the
current cycle. It has the balance sheet resources, design assets, and
strong franchises to best shape the development of the video game
industry’s rapid change. As baby boomers leave the work force, they
have more leisure time, which we believe favors Nintendo’s (HOLD)
Wii console. Rather than compete directly with the next-gen technology
of PS3 and Xbox 360, Wii concentrates on simpler games
and incorporates easy-to-use, differentiated features, such as a
motion-controlled joystick. We believe this strategy could expand
the industry’s effective market with boomers, women and children,
who typically have limited gaming experience. Steven Soranno
The aesthetics market is highly competitive and is characterized by
rapid technological development and product innovations. We would
recommend investing in niche speciality pharma companies, such
as Medicis (HOLD) and Allergan (BUY). Medicis is the producer of
dermal filler Restylane, the most widely used hyaluronic acid gel.
By early 2007, the company plans to launch another dermal filler,
Perlane, which has similar ingredients to Restylane but targets
deeper dermis indications. Allergan, the maker of Botox, is Medicis’
biggest competitor. Allergan is launching its own longer-lasting
dermal filler, Juvederm, in early 2007. Tania Dimitrova
Sports industry races ahead
Nike (BUY) is the world’s number one athletic apparel and footwear
manufacturer. Its brand is heavily associated with sports and is
synonymous with quality, performance and innovation. Over the
last few years, Nike has provided a more diverse product offering,
opening it up to income from new types of consumer (both highand
low-end) and thus catching many aspects of the leisure trend
while adding stability to earnings. Puma (BUY) is a label seen as
being more closely linked to fashion than to sports. It is currently
leveraging its trendy brand image to grow in new markets such as
China, while increasing its link to performance and prestige sports.
This latter move has enabled Puma to start combining its brand
with other sport-linked brands such as Ferrari and Ducati, which
seems to be a rewarding strategy given Puma’s superior sales
growth to that of its peers. David Williamson, Markus Mächler

GLOBAL INVESTOR FOCUS Leisure — 52
Authors
Urs Dickenmann..................................................................................... 03
Urs Dickenmann has been in charge of Credit Suisse’s Private Banking business
in Switzerland since 1 January 2006. After joining Credit Suisse in 1986, he
headed various accounting and control departments as well as commercial
banking units. He switched to Private Banking in 1999 after being put in charge
of the Lucerne branch office. In 2002 he was appointed regional head of Central
Switzerland and one year later this was expanded to include West-Central Switzerland
as well as dealing with the activities of independent asset managers. Urs
Dickenmann was born in Zurich in 1956. Upon graduation from HSW Zurich he
worked as Finance and Administration Officer for LUWA (France) S.A. He is married
and the father of two children.
Conradin Stiffler................................................................................ 11–15
Conradin Stiffler is an architect by profession. He has worked at Credit Suisse
Asset Management since 1999, starting out in the Real Estate Acquisition & Sales
business unit. Between 2001 and 2003, Mr. Stiffler was head of the Development
& Construction unit and then Acquisition & Sales. Since mid-2003, he has been
responsible for the entire project management of Sihlcity – a real estate development
complex located on the south side of Zurich, with an investment volume
of CHF 620 million. Following his studies at the ETH Zurich, Mr. Stiffler worked
as an independent architect as well as for a Zurich-based real state company
before arriving at Credit Suisse. Conradin Stiffler was born in Switzerland, is 38
years old, married and the father of two children. Incidentally, he is also happy
that he and his family live within walking distance of Sihlcity.
Jonathan Israel Gershuny .................................................................06–10
Jonathan Israel Gershuny, born in 1949, was appointed to Oxford University’s
Professorship of Sociology, and to a Fellowship at St Hugh’s College. Before that
he was Professor of Economic Sociology and Director of the Institute for Social
and Economic Research at Essex University from 1993 to 2006. He was the
Principal Investigator for the British Household Panel Study for a decade from
1993, and he has directed the Multinational Time Use Study since its inception
in 1985. Among Professor Gershuny’s research interests are the relationship
between individual-level behavior and socioeconomic structure, as well as interconnections
between household organization and labor force participation.
Selected publications: “Changing Times: Work and Leisure in Post-industrial
Societies,” “Social Innovation and the Division of Labour,” both published by
Oxford University Press.
Eike Wenzel....................................................................................... 16–21
Eike Wenzel has worked as chief editor at the Zukunftsinstitut based in Kelkheim,
Germany, since 2002, participating in consulting projects for companies in a vast
array of sectors. After finishing his studies in the fields of communications sciences,
cultural sociology and philosophy, he obtained his doctorate degree in
media sciences from the University of Marburg. Thereafter, Mr. Wenzel worked
as a journalist for the German newspapers “Wirtschaftswoche” and “Frankfurter
Rundschau,” among others. His research interests encompass subjects such as
leisure time, consumption and value changes, in particular. He is also author of
numerous studies and publications, including “Die neuen (Frei)-Zeitmärkte” (The
New [Leisure]-Time Markets) and “Tourismus 2020. Die neuen Sehnsuchtsmärkte”
(Tourism in 2020: The New Aspiring Markets). Born in 1966, the futurologist
prefers spending his leisure time mostly with his two children in the great
outdoors, enjoying nature.
Foong Wai Fong ................................................................................22–27
Foong Wai Fong is the Director of Megatrends Asia, a global research organization,
founded with John Naisbitt of Megatrends fame. Ms. Foong, a graduate
of economics from the University of Malaya, directs the Asian research programs
from bases in Kuala Lumpur and Shanghai. Her research areas include macroeconomic
trends in Asia, the progress of reform and changes in China, cultural
industries and sustainable development. Ms. Foong is a much sought-after
speaker by multinational companies and institutions on Asian trends and she
regularly contributes to regional economic and business publications. She travels
a lot and speaks several Asian languages. Foong Wai Fong has three best-selling
books to her credit: “The New Asian Way,” “We Have to Talk, Mr. Prime Minister”
and “Culture is Good Business.”

GLOBAL INVESTOR FOCUS Leisure — 53
Guerrino De Luca ............................................................................. 28–30
Guerrino De Luca, born 1952 in Italy, joined Logitech in 1998 as President and
Chief Executive Officer. He is responsible for the worldwide affairs and operations
of Logitech. He manages both the strategic activities of the company as
well as the day-to-day operations. Before joining Logitech, Mr. De Luca served
as Executive Vice President of Worldwide Marketing for Apple Computer, Inc.,
from February 1997 to September 1997, and as President of Claris Corporation,
from 1994 to 1997. Prior to that, he held various positions with Apple in the
United States and in Europe. Guerrino De Luca holds a Bachelor of Science
degree in Electronic Engineering from the University of Rome. He lives in San
Francisco, is married and has two children.
Warren C. Jenson.............................................................................. 31–33
Warren C. Jenson joined Electronic Arts in June 2002 as Executive Vice President,
Chief Financial and Administrative Officer. Before joining the company, he
was Senior Vice President and Chief Financial Officer for Amazon.com from
1999 to 2002. From 1998 to 1999, he was Chief Financial Officer and Executive
Vice President for Delta Air Lines. Prior to that, he worked in several positions
for the General Electric Company. Most notably, he served as Chief Financial
Officer and Senior Vice President for the National Broadcasting Company (NBC),
a subsidiary of General Electric. Warren has received several awards – including
recognition as one of the “Best CFOs in America” by Institutional Investor. Warren
C. Jenson earned his Masters in Accountancy-Business Taxation from Brigham
Young University. Mr. Jenson is a citizen of the United States; born in 1956, he is
married and has four children, all of whom like to play games.
Credit Suisse Research Team.....................................................................
Lars Kalbreier, Managing Director..........................................................34
Head of Global Equities & Alternatives Research............. +41 (44) 333 23 94
Pascal Rohner .........................................................................................34
European Retail............................................................ +41 (44) 334 56 88
Eric Güller, Vice President ......................................................................36
Insurance, Real Estate.................................................. +41 (44) 332 90 59
Zoltan Szelyes, Assistant Vice President ...............................................36
Global Real Estate ...................................................... +41 (44) 334 83 22
Ulrich Kaiser, Vice President ..........................................28–30, 31–33, 37
IT Hardware, IT Services and Software, Media................ +41 (44) 334 56 49
Etrita Ibroci, Director ..............................................................................38
Trading Strategy ............................................................. +1 (212) 317 6704
Markus Mächler, Vice President .......................................................39, 48
Automotive, Capital Goods, Transport.............................. +41 (44) 334 56 41
David A. Williamson, Director............................................................39, 48
Head of US Equity Research, Consumer Discretionary .......+1 (212) 317 6701
Fan Cheuk Wan, Director .................................................................. 40–41
Head of Asian Equity Research ..........................................+852 2841 4841
Olivier P.Müller, Vice President ..............................................................42
Italian and Nordic Banks, Consumer Staples....................+41 (44) 333 01 46
Robin Seydoux, Director.........................................................................43
Head of European Equity Sector Research, Luxury Goods ..+41 (44) 333 37 39
Uwe Neumann, Vice President ........................................................ 44–45
Technology, Telecommunications ................................... +41 (44) 334 56 45
Steven Soranno, Vice President .............................................................46
Information Technology and Telecom................................ +1 (212) 317 6702
Tania Dimitrova, Assistant Vice President .............................................. 47
Health care.....................................................................+1 (212) 317 6715

GLOBAL INVESTOR FOCUS Leisure — 54
Disclosure appendix
Analyst certification
The analysts identified in this report hereby certify that views about the companies and
their securities discussed in this report accurately reflect their personal views about all of
the subject companies and securities. The analysts also certify that no part of their compensation
was, is, or will be directly or indirectly related to the specific recommendation(s)
or view(s) in this report.
Important disclosures
Credit Suisse policy is to publish research reports, as it deems appropriate, based on
developments with the subject company, the sector or the market that may have a material
impact on the research views or opinions stated herein. Credit Suisse policy is only to
publish investment research that is impartial, independent, clear, fair and not misleading.
For more detail, please refer to the information on independence of financial research,
which can be found at:
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The analyst(s) responsible for preparing this research report received compensation that
is based upon various factors including Credit Suisse total revenues, a portion of which
are generated by Credit Suisse Investment Banking business.
The Credit Suisse Code of Conduct to which all employees are obliged to adhere, is accessible
via the website at:
https://www.credit-suisse.com/governance/en/code_of_conduct.html
Rating history as of 06/02/2007
Company
Rating Date (since)
ALCATEL-LUCENT BUY 24/10/2006
(ALU FP)
HOLD 24/03/2006
BUY 04/01/2005
HOLD 09/01/2004
SELL 12/09/2003
ALLERGAN (AGN US) BUY 10/10/2006
ALTAIR NANOTECH BUY 08/01/2007
(ALTI US)
BRIGHT FAMILY SOL BUY 31/01/2007
(BFAM US)
CAMBRIDGE DISPLAY BUY 09/01/2007
(OLED US)
CARNIVAL (CCL US) BUY 21/09/2006
HOLD 26/04/2005
BUY 23/02/2005
CHINA COMM SRVCS-H HOLD 31/01/2007
(552 HK)
CHINA MOBILE (941 HK) SELL 30/03/2006
HOLD 08/02/2006
SELL 06/12/2005
HOLD 21/11/2005
BUY 21/10/2005
HOLD 04/10/2005
BUY 16/03/2005
CHINA NETCOM GROUP BUY 06/12/2006
(906 HK)
HOLD 23/08/2005
BUY 10/01/2005
CHINA TELECOM -H- HOLD 06/12/2006
(728 HK)
BUY 06/10/2006
HOLD 24/05/2006
Company
Rating Date (since)
BUY 11/04/2005
BUY 14/02/2005
DANONE (BN FP) BUY 22/02/2006
HOLD 20/07/2005
BUY 26/04/2005
HOLD 15/01/2004
ELECTRONIC ARTS BUY 12/01/2007
(ERTS US)
HARRIS & HARRIS BUY 29/01/2007
(TINY US)
KRAFT FOODS-A (KFT US) HOLD 18/02/2004
BUY 03/10/2003
LINDT & SPRUENGL PS BUY 16/06/2006
(LISP SW)
HOLD 01/09/2004
MATSUSHITA EL INDL HOLD 06/02/2007
(6752 JP)
BUY 24/01/2007
BUY 03/02/2006
HOLD 21/07/2005
BUY 17/12/2004
MCDONALD’S (MCD US) BUY 24/01/2006
HOLD 08/06/2005
MEDICIS PHARM -A- HOLD 07/12/2006
(MRX US)
MEINL EUROPEAN LAND BUY 23/01/2007
(Mel AV)
BUY 11/01/2006
NEC (6701 JP) HOLD 28/10/2005
BUY 19/04/2005
HOLD 17/05/2004
NESTLE N (NESN VX) BUY 19/01/2007
BUY 15/01/2004
Company
Rating Date (since)
HOLD 16/09/2003
NEWS-A (NWS/A) BUY 17/05/2006
NIKE -B- (NKE) BUY 23/02/2005
NINTENDO CO LTD HOLD 24/01/2007
(7974 JP)
HOLD 10/05/2005
SELL 11/06/2004
NOKIA (NOK1V FH) HOLD 05/01/2007
BUY 11/04/2006
HOLD 09/06/2005
BUY 27/01/2005
HOLD 07/04/2004
BUY 09/01/2004
PEARSON (PSON LN) HOLD 23/06/2006
HOLD 28/02/2005
BUY 05/10/2004
PEPSICO (PEP US) BUY 12/01/2005
BUY 04/01/2005
HOLD 21/04/2004
PUMA (PUM GR) BUY 22/08/2005
RODAMCO EUROPE HOLD 23/01/2007
(RCEA NA)
HOLD 15/06/2005
SAMSUNG ELECTRONICS BUY 22/01/2007
CO LTD (005930 KS)
BUY 13/01/2006
HOLD 15/09/2005
BUY 17/02/2004
SHARP CORP OSAKA BUY 06/02/2007
(6753 JP)
HOLD 24/01/2007
Company
Rating Date (since)
HOLD 14/12/2005
BUY 17/08/2005
HOLD 25/07/2005
SIEMENS R (SIE GY) BUY 15/12/2004
HOLD 24/02/2004
SIMON PROP GRP HOLD 31/01/2007
(SPG US)
STARBUCKS (SBUX) HOLD 02/06/2005
SELL 11/04/2005
HOLD 23/02/2005
HOLD 16/02/2005
SUNTEC REIT (SUN SP) HOLD 02/02/2007
HOLD 31/03/2006
BUY 06/12/2005
BUY 27/07/2005
BUY 20/01/2005
TALLINK GRP LTD HOLD 24/01/2007
(TAL1T ET)
TEIJIN LTD (3401 JP) HOLD 29/01/2007
TUI N (TUI1 GR) HOLD 23/03/2005
SELL 15/09/2003
WALT DISNEY (DIS US) BUY 11/02/2005
HOLD 13/10/2004
WESTFIELD GRP HOLD 20/07/2006
(WDC.AU)
BUY 19/12/2005
Fundamental and/or long-term research reports are not regularly produced for (BRIGHT
FAMILY SOL, SIMON PROP GRP, TEIJIN LTD, TALLINK GROUP LTD). Credit Suisse
reserves the right to terminate coverage at short notice. Please contact your Relationship
Manager for the specific risks of investing in securities of these companies.
Credit Suisse has managed or co-managed a public offering of securities for the subject
issuer (CHINA COMM SRVCS-H, CHINA MOBILE, CHINA NETCOM GROUP, CHINA
TELECOM -H-, DANONE, MCDONALD’S, NESTLE N, SIMON PROP GRP, THE WALT
DISNEY CO., WESTFIELD GRP) within the past three years.
Credit Suisse has managed or co-managed a public offering of securities for the subject
issuer (CHINA COMM SRVCS-H, CHINA MOBILE, CHINA NETCOM GROUP, CHINA
TELECOM -H-, DANONE, NESTLE N, SIMON PROP GRP, THE WALT DISNEY CO.,
WESTFIELD GRP) within the past 12 months.
Credit Suisse has received investment banking related compensation from the subject
issuer (ALCATEL-LUCENT, CHINA COMM SRVCS-H, CHINA MOBILE, CHINA NETCOM
GROUP, CHINA TELECOM -H-, DANONE, ELECTRONIC ARTS, KRAFT FOODS-A, NESTLE
N, NOKIA, RODAMCO EUROPE, SIEMENS R, SIMON PROP GRP, THE WALT DISNEY
CO., WESTFIELD GRP) within the past 12 months.
Credit Suisse expects to receive or intends to seek investment banking related compensation
from the subject issuer (ALCATEL-LUCENT, ALLERGAN, BRIGHT FAMILY SOL,
CARNIVAL, CHINA COMM SRVCS-H, CHINA MOBILE, CHINA NETCOM GROUP, CHINA
TELECOM -H-, DANONE, ELECTRONIC ARTS, KRAFT FOODS-A, MATSUSHITA EL INDL,
MCDONALD’S, NEC, NESTLE N, NEWS-A, NIKE -B-, NINTENDO CO LTD, NOKIA,
PEARSON, PEPSICO, PUMA, RODAMCO EUROPE, SAMSUNG ELECTRONICS CO LTD,
SHARP CORP OSAKA, SIEMENS R, SIMON PROP GRP, STARBUCKS, SUNTEC REIT,
TEIJIN LTD, TUI N, THE WALT DISNEY CO., WESTFIELD GRP) within the next three
months.
As at the date of this report, Credit Suisse acts as a market maker or liquidity provider in the
securities of the subject issuer (ALLERGAN, BRIGHT FAMILY SOL, ELECTRONIC ARTS,
MATSUSHITA EL INDL, MCDONALD’S, MEDICIS PHARM -A-, NEC, NIKE -B-, PEPSICO,
SHARP CORP OSAKA, SIMON PROP GRP, STARBUCKS, THE WALT DISNEY CO.).
Credit Suisse holds a trading position in the subject issuer (ALCATEL-LUCENT, ALLERGAN,
ALTAIR NANOTECH, BRIGHT FAMILY SOL, CARNIVAL, CHINA COMM SRVCS-H, CHINA
MOBILE, CHINA NETCOM GROUP, CHINA TELECOM -H-, DANONE, ELECTRONIC ARTS,
HARRIS & HARRIS, KRAFT FOODS-A, LINDT & SPRUENGL PS, MATSUSHITA EL INDL,
MCDONALD’S, MEDICIS PHARM -A-, NEC, NESTLE N, NEWS-A, NIKE -B-, NINTENDO

GLOBAL INVESTOR FOCUS Leisure — 55
CO LTD, NOKIA, PEARSON, PEPSICO, PUMA, RODAMCO EUROPE, SAMSUNG ELEC-
TRONICS CO LTD, SHARP CORP OSAKA, SIEMENS R, SIMON PROP GRP, STARBUCKS,
SUNTEC REIT, TEIJIN LTD, TUI N, THE WALT DISNEY CO., WESTFIELD GRP, MEINL
EUROPEAN LAND, TALLINK GROUP LTD, CAMBRIDGE DISPLAY).
As at the end of the preceding month, Credit Suisse beneficially owned 1% or more of a
class of common equity securities of (CHINA MOBILE, CHINA TELECOM -H-, NEC,
SAMSUNG ELECTRONICS CO LTD).
Swiss American Securities Inc. disclosures
Swiss American Securities Inc. or its affiliates has managed or co-managed a public offering
of securities for the subject issuer (CHINA COMM SRVCS-H, CHINA MOBILE, CHINA
NETCOM GROUP, CHINA TELECOM -H-, DANONE, NESTLE N, SIMON PROP GRP, THE
WALT DISNEY CO., WESTFIELD GRP) within the past 12 months.
Swiss American Securities Inc. or its affiliates has received investment banking related
compensation from the subject issuer (ALCATEL-LUCENT, CHINA COMM SRVCS-H,
CHINA MOBILE, CHINA NETCOM GROUP, CHINA TELECOM -H-, DANONE, ELECTRONIC
ARTS, KRAFT FOODS-A, NESTLE N, NOKIA, RODAMCO EUROPE, SIEMENS R, SIMON
PROP GRP, THE WALT DISNEY CO., WESTFIELD GRP) within the past 12 months.
Swiss American Securities Inc. or its affiliates expects to receive or intends to seek investment
banking related compensation from the subject issuer (ALCATEL-LUCENT, ALLERGAN,
BRIGHT FAMILY SOL, CARNIVAL, CHINA COMM SRVCS-H, CHINA MOBILE, CHINA
NETCOM GROUP, CHINA TELECOM -H-, DANONE, ELECTRONIC ARTS, KRAFT FOODS-
A, MATSUSHITA EL INDL, MCDONALD’S, NEC, NESTLE N, NEWS-A, NIKE -B-,
NINTENDO CO LTD, NOKIA, PEARSON, PEPSICO, PUMA, RODAMCO EUROPE,
SAMSUNG ELECTRONICS CO LTD, SHARP CORP OSAKA, SIEMENS R, SIMON PROP
GRP, STARBUCKS, SUNTEC REIT, TEIJIN LTD, TUI N, THE WALT DISNEY CO., WESTFIELD
GRP) within the next three months.
As of the date of this report, Swiss American Securities Inc. acts as a market maker
or liquidity provider in the equity securities of the subject issuer (ALCATEL-LUCENT,
ALLERGAN, CHINA MOBILE, KRAFT FOODS-A, MATSUSHITA EL INDL, MCDONALD’S,
MEDICIS PHARM -A-, NIKE -B-, PEPSICO, SIEMENS R, SIMON PROP GRP, THE WALT
DISNEY CO.).
As at the end of the preceding month, Swiss American Securities Inc. or its affiliates
beneficially owned 1% or more of a class of common equity securities of (CHINA MOBILE,
CHINA TELECOM -H-, NEC, SAMSUNG ELECTRONICS CO LTD).
Swiss American Securities Inc. or its affiliates holds a trading position in the subject
issuer (ALCATEL-LUCENT, ALLERGAN, ALTAIR NANOTECH, BRIGHT FAMILY SOL,
CARNIVAL, CHINA COMM SRVCS-H, CHINA MOBILE, CHINA NETCOM GROUP, CHINA
TELECOM -H-, DANONE, ELECTRONIC ARTS, HARRIS & HARRIS, KRAFT FOODS-A,
LINDT & SPRUENGL PS, MATSUSHITA EL INDL, MCDONALD’S, MEDICIS PHARM -A-,
NEC, NESTLE N, NEWS-A, NIKE -B-, NINTENDO CO LTD, NOKIA, PEARSON, PEPSICO,
PUMA, RODAMCO EUROPE, SAMSUNG ELECTRONICS CO LTD, SHARP CORP OSAKA,
SIEMENS R, SIMON PROP GRP, STARBUCKS, SUNTEC REIT, TEIJIN LTD, TUI N, THE
WALT DISNEY CO., WESTFIELD GRP, MEINL EUROPEAN LAND, TALLINK GROUP LTD,
CAMBRIDGE DISPLAY).
Additional disclosures for the following jurisdictions
Dubai: Related financial products or services are only available to wholesale customers
with liquid assets of over USD 1 million who have sufficient financial experience and understanding
to participate in financial markets in a wholesale jurisdiction and satisfy the
regulatory criteria to be a client. Hong Kong: Other than any interests held by the analyst
and/or associates as disclosed in this report, Credit Suisse Hong Kong Branch does not
hold any disclosable interests. Qatar: All related financial products or services will only be
available to Business Customers or Market Counterparties (as defined by the Qatar Financial
Centre Regulatory Authority (QFCRA), including individuals, who have opted to be
classified as a Business Customer, with liquid assets in excess of USD 1 million, and who
have sufficient financial knowledge, experience and understanding to participate in such
products and/or services. Russia: The research contained in this report does not constitute
any sort of advertisement or promotion for specific securities, or related financial instruments.
This research report does not represent a valuation in the meaning of the Federal
Law On Valuation Activities in the Russian Federation and is produced using Credit Suisse
valuation models and methodology. United Kingdom: For fixed income disclosure information
for clients of Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited,
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For further information, including disclosures with respect to any other issuers, please
refer to the Credit Suisse Global Research Disclosure site at:
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Guide to analysis
Rating allocation as of 01/02/2007
Overall
Investment banking interests only
BUY 45.78% 45.15%
HOLD 49.19% 50.50%
SELL 4.55% 3.76%
RESTRICTED 0.49% 0.59%
Relative performance
At the stock level, the selection takes into account the relative attractiveness of individual
shares versus the sector, market position, growth prospects, balance-sheet structure and
valuation. The sector and country recommendations are “overweight,” “neutral”, and “underweight”
and are assigned according to relative performance against the respective regional
and global benchmark indices.
Absolute performance
The stock recommendations are BUY, HOLD and SELL and are dependent on the expected
absolute performance of the individual stocks, generally on a 6–12 months horizon
based on the following criteria:
BUY
HOLD
SELL
RESTRICTED
TERMINATED
BUY
HOLD
SELL
RESTRICTED
10% or greater increase in absolute share price
variation between –10% and +10% in absolute share price
10% or more decrease in absolute share price
In certain circumstances, internal and external regulations exclude
certain types of communications, including e.g. an investment
recommendation during the course of Credit Suisse engagement in
an investment banking transaction.
Research coverage has been concluded.
Corporate and emerging market bond recommendations
The recommendations are based fundamentally on forecasts for total returns versus the
respective benchmark on a 3 – 6 month horizon and are defined as follows:
Expectation that the bond issue will be a top performer in its segment
Expectation that the bond issue will return average performance
in its segment
Expectation that the bond issue will be among the poor performer
in its segment
In certain circumstances, internal and external regulations exclude
certain types of communications, including e.g. an investment
recommendation during the course of Credit Suisse engagement
in an investment banking transaction.
Credit ratings definition
Credit Suisse assigns rating opinions to investment-grade and crossover issuers. Ratings
are based on our assessment of a company’s creditworthiness and are not recommendations
to buy or sell a security. The ratings scale (AAA, AA, A, BBB, BB) is dependent on our
assessment of an issuer’s ability to meet its financial commitments in a timely manner.
AAA
AA
A
BBB
BB
Best credit quality and lowest expectation of credit risks, including an
exceptionally high capacity level with respect to debt servicing. This
capacity is unlikely to be adversely affected by foreseeable events.
Obligor’s capacity to meet its financial commitments is very strong
Obligor’s capacity to meet its financial commitments is strong
Obligor’s capacity to meet its financial commitments is adequate,
but adverse economic/operating/financial circumstances are more
likely to lead to a weakened capacity to meet its obligations
Obligations have speculative characteristics and are subject to
substantial credit risk due to adverse economic/operating/financial
circumstances resulting in inadequate debt-servicing capacity
For the AA, A, BBB, BB categories, creditworthiness is further detailed with a scale of
High, Mid, or Low, with High being the strongest sub-category rating. An Outlook indicates
the direction a rating is likely to move over a two-year period. Outlooks may be positive,

GLOBAL INVESTOR FOCUS Leisure — 56
stable or negative. A positive or negative Rating Outlook does not imply a rating change is
inevitable. Similarly, ratings for which outlooks are “stable” could be upgraded or downgraded
before an outlook moves to positive or negative if circumstances warrant such an
action.
Credit Suisse HOLT
The Credit Suisse HOLT methodology does not assign ratings to a security. It is an analytical
tool that involves use of a set of proprietary quantitative algorithms and warranted
value calculations, collectively called the Credit Suisse HOLT valuation model, that are
consistently applied to all the companies included in its database. Third-party data (including
consensus earnings estimates) are systematically translated into a number of default
variables and incorporated into the algorithms available in the Credit Suisse HOLT valuation
model. The source financial statement, pricing, and earnings data provided by outside data
vendors are subject to quality control and may also be adjusted to more closely measure
the underlying economics of firm performance. These adjustments provide consistency
when analyzing a single company across time, or analyzing multiple companies across
industries or national borders. The default scenario that is produced by the Credit Suisse
HOLT valuation model establishes the baseline valuation for a security, and a user then
may adjust the default variables to produce alternative scenarios, any of which could occur.
The Credit Suisse HOLT methodology does not assign a price target to a security. The
default scenario that is produced by the Credit Suisse HOLT valuation model establishes
a warranted price for a security, and as the third-party data are updated, the warranted
price may also change. The default variables may also be adjusted to produce alternative
warranted prices, any of which could occur. Additional information about the Credit Suisse
HOLT methodology is available on request.
For technical research
Where recommendation tables are mentioned in the report, “Close” is the latest closing price
quoted on the exchange. “MT” denotes the rating for the medium-term trend (3–6 months
outlook). “ST” denotes the short-term trend (3–6 weeks outlook). The ratings are “+” for
a positive outlook (price likely to rise), “0” for neutral (no big price changes expected) and
“–“ for a negative outlook (price likely to fall). Outperform in the column “Rel perf” denotes
the expected performance of the stocks relative to the benchmark. The “Comment” column
includes the latest advice from the analyst. In the column “Recom” the date is listed when
the stock was recommended for purchase (opening purchase). “P&L” gives the profit or
loss that has accrued since the purchase recommendation was given.
For a short introduction to technical analysis, please refer to Technical Analysis Explained at:
https://entry4.credit-suisse.ch/csfs/research/p/d/de/techresearch/media/pdf/
trs_tutorial_en.pdf
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